CREDIT AGREEMENT
Dated as of September 15, 1999
among
CRESCENT JEWELERS,
as Borrower,
CRESCENT JEWELERS, INC.
and
CERTAIN SUBSIDIARIES AND AFFILIATES OF THE BORROWER,
as Guarantors,
THE LENDERS NAMED HEREIN
BANK OF AMERICA, N.A.,
as Administrative Agent
AND
GENERAL ELECTRIC CAPITAL CORPORATION,
as Documentation Agent
Arranged by:
BANC OF AMERICA SECURITIES LLC,
as Sole Lead Arranger and Sole Book Manager
TABLE OF CONTENTS
Page
SECTION 1 DEFINITIONS.............................................. 1
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1.1 Definitions............................................... 1
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1.2 Computation of Time Periods............................... 29
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1.3 Accounting Terms.......................................... 29
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SECTION 2 CREDIT FACILITIES........................................ 30
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2.1 Commitments............................................... 30
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2.2 Method of Borrowing....................................... 33
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2.3 Interest.................................................. 34
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2.4 Repayment................................................. 35
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2.5 Notes..................................................... 35
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2.6 Additional Provisions relating to Letters of Credit....... 35
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2.7 Additional Provisions relating to Swingline Loans......... 40
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SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES........... 41
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3.1 Default Rate.............................................. 41
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3.2 Extension and Conversion.................................. 41
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3.3 Prepayments............................................... 42
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3.4 Reduction and Termination of Commitments.................. 43
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3.5 Fees...................................................... 43
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3.6 Capital Adequacy.......................................... 44
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3.7 Limitation on Eurodollar Loans............................ 45
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3.8 Illegality................................................ 45
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3.9 Requirements of Law....................................... 45
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3.10 Treatment of Affected Loans.............................. 46
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3.11 Taxes.................................................... 47
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3.12 Compensation............................................. 49
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3.13 Pro Rata Treatment....................................... 50
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3.14 Sharing of Payments...................................... 51
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3.15 Certain Limitations...................................... 52
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3.16 Payments, Computations, Etc.............................. 53
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3.17 Evidence of Debt......................................... 55
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SECTION 4 GUARANTY................................................. 55
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4.1 The Guaranty.............................................. 56
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4.2 Obligations Unconditional................................. 56
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4.3 Reinstatement............................................. 57
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4.4 Certain Additional Waivers................................ 58
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4.5 Remedies.................................................. 58
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4.6 Rights of Contribution.................................... 58
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4.7 Guarantee of Payment; Continuing Guarantee................ 59
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SECTION 5 CONDITIONS............................................... 60
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5.1 Closing Conditions........................................ 60
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5.2 Conditions to all Extensions of Credit.................... 63
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SECTION 6 REPRESENTATIONS AND WARRANTIES........................... 64
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6.1 Financial Condition....................................... 64
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6.2 No Changes or Restricted Payments..........................64
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6.3 Organization; Existence; Compliance with Law...............65
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6.4 Power; Authorization; Enforceable Obligations..............65
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6.5 No Legal Bar...............................................66
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6.6 No Material Litigation and Disputes........................66
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6.7 No Defaults................................................66
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6.8 Ownership and Operation of Property........................66
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6.9 Intellectual Property......................................67
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6.10 No Burdensome Restrictions................................67
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6.11 Taxes.....................................................67
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6.12 ERISA.....................................................67
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6.13 Governmental Regulations, Etc.............................69
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6.14 Subsidiaries..............................................70
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6.15 Purpose of Extensions of Credit...........................70
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6.16 Environmental Matters.....................................70
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6.17 Year 2000 Compliance......................................71
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6.18 No Material Misstatements.................................71
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6.19 Labor Matters.............................................72
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6.20 Security Documents........................................72
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6.21 Location of Real Property and Leased Premises.............73
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6.22 Solvency..................................................74
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SECTION 7 AFFIRMATIVE COVENANTS.....................................74
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7.1 Information Covenants......................................74
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7.2 Preservation of Existence and Franchises...................78
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7.3 Books and Records..........................................78
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7.4 Compliance with Law........................................78
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7.5 Payment of Taxes and Other Indebtedness....................78
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7.6 Insurance..................................................78
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7.7 Maintenance of Property....................................79
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7.8 Performance of Obligations.................................79
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7.9 Use of Proceeds............................................79
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7.10 Audits/Inspections........................................80
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7.11 Financial Covenants.......................................80
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7.12 Additional Guarantors.....................................80
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7.13 Pledged Assets............................................81
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7.14 Year 2000 Compliance......................................82
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7.15 Interest Rate Protection..................................82
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SECTION 8 NEGATIVE COVENANTS........................................82
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8.1 Indebtedness...............................................83
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8.2 Liens......................................................83
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8.3 Nature of Business.........................................84
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8.4 Merger and Consolidation, Dissolution and Acquisitions.....84
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8.5 Asset Dispositions.........................................84
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8.6 Investments................................................85
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8.7 Restricted Payments........................................85
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8.8 Modifications and Payments in respect
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of Other Funded Debt.......................................85
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8.9 Transactions with Affiliates...............................86
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8.10 Fiscal Year; Organizational Documents.....................86
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8.11 Ownership of Subsidiaries; Limitations on Parent..........86
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8.12 No Further Negative Pledges...............................87
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8.13 Limitation on Management Fees.............................87
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8.14 Limitation on Foreign Subsidiaries........................87
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SECTION 9 EVENTS OF DEFAULT.........................................88
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9.1 Events of Default..........................................88
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9.2 Acceleration; Remedies.....................................90
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SECTION 10 AGENCY PROVISIONS........................................91
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10.1 Appointment, Powers and Immunities........................91
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10.2 Reliance by Administrative Agent..........................92
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10.3 Defaults..................................................92
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10.4 Rights as a Lender........................................93
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10.5 Indemnification...........................................93
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10.6 Non-Reliance on Administrative Agent and Other Lenders....94
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10.7 Successor Administrative Agent............................94
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10.8 Appointment of Collateral Agent...........................94
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10.9 Documentation Agent.......................................95
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SECTION 11 MISCELLANEOUS............................................95
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11.1 Notices...................................................95
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11.2 Right of Set-Off; Adjustments.............................97
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11.3 Benefit of Agreement......................................97
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11.4 No Waiver; Remedies Cumulative............................99
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11.5 Expenses; Indemnification................................100
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11.6 Amendments, Waivers and Consents.........................101
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11.7 Counterparts.............................................102
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11.8 Headings.................................................103
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11.9 Survival.................................................103
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11.10 Governing Law; Submission to Jurisdiction; Venue........103
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11.11 Severability............................................104
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11.12 Entirety................................................104
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11.13 Binding Effect; Termination.............................104
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11.14 Confidentiality.........................................104
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11.15 Source of Funds.........................................105
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11.16 Conflict................................................106
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SCHEDULES
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Schedule 2.1 Lenders and Commitments
Schedule 2.2(a)(i) Form of Notice of Borrowing
Schedule 2.2(a)(ii) Form of Notice of Request of Letter of Credit
Schedule 2.5 Form of Revolving Note
Schedule 2.6(b) Existing Letters of Credit
Schedule 3.2 Form of Notice of Extension/Conversion
Schedule 5.1(g)(v) Form of Officer's Certificate
Schedule 6.2 Changes and Restricted Payments Since the Date of the
Most Recent Audited Financial Statements
Schedule 6.6 Litigation
Schedule 6.8 Liens
Schedule 6.9 Intellectual Property
Schedule 6.14 Subsidiaries
Schedule 6.19 Labor Matters
Schedule 6.21(a) Real Properties
Schedule 6.21(b) Locations of Collateral
Schedule 6.21(c) Chief Executive Offices/Principal Places
of Business
Schedule 7.1(c) Form of Officer's Compliance Certificate
Schedule 7.6 Insurance
Schedule 7.12 Form of Joinder Agreement
Schedule 8.1 Indebtedness
Schedule 8.6 Investments
Schedule 11.1 Lenders' Addresses
Schedule 11.3(b) Form of Assignment and Acceptance
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of September 15, 1999 (the "Credit
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Agreement"), is by and among CRESCENT JEWELERS, a California corporation (the
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"Borrower"), CRESCENT JEWELERS, INC., a Delaware corporation (the "Parent"), and
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the subsidiaries and affiliates identified on the signature pages hereto and
such other subsidiaries and affiliates as may from time to time become
Guarantors hereunder in accordance with the provisions hereof (together with the
Parent, the "Guarantors"), the lenders named herein and such other lenders as
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may become a party hereto (the "Lenders"), BANK OF AMERICA, N.A., as
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Administrative Agent for the Lenders (in such capacity, the "Administrative
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Agent") and GENERAL ELECTRIC CAPITAL CORPORATION, as Documentation Agent for the
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Lenders (in such capacity, the "Documentation Agent").
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W I T N E S S E T H
WHEREAS, the Borrower has requested that the Lenders provide $112.5 million
in credit facilities for the purposes hereinafter set forth; and
WHEREAS, the Lenders have agreed to make the requested credit facilities
available to the Borrower on the terms and conditions hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS
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1.1 Definitions.
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As used in this Credit Agreement, the following terms shall have the
meanings specified below:
"Acquisition", by any Person, means the purchase or acquisition by such
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Person of any Capital Stock of another Person other than a member of the
Consolidated Group or all or any substantial portion of the Property (other
than Capital Stock) of another Person other than a member of the
Consolidated Group, whether or not involving a merger or consolidation with
such other Person.
"Adjusted Base Rate" means the Base Rate plus the Applicable
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Percentage.
"Adjusted Eurodollar Rate" means the Eurodollar Rate plus the
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Applicable Percentage.
"Administrative Agent" shall have the meaning assigned to such term in
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the heading hereof, together with any successors or assigns.
"Administrative Agent's Fee Letter" means that certain letter
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agreement, dated as of July 13, 1999, between the Administrative Agent and
the Borrower, as amended, modified, restated or supplemented from time to
time.
"Administrative Agent's Fees" shall have the meaning assigned to such
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term in Section 3.5(c).
"Affiliate" means, with respect to any Person, any other Person (i)
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directly or indirectly controlling or controlled by or under direct or
indirect common control with such Person or (ii) directly or indirectly
owning or holding ten percent (10%) or more of the Capital Stock in such
Person. For purposes of this definition, "control" when used with respect
to any Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agency Services Address" means the notice address for the
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Administrative Agent set forth in Section 11.1 or such other address as may
be identified by written notice from the Administrative Agent to the
Borrower.
"Aggregate Revolving Committed Amount" means the aggregate amount of
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Revolving Commitments in effect from time to time, as referenced in Section
2.1(a), being initially ONE HUNDRED TWELVE MILLION FIVE HUNDRED THOUSAND
DOLLARS ($112,500,000).
"Applicable Lending Office" means, for each Lender, the office of such
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Lender (or of an Affiliate of such Lender) as such Lender may from time to
time specify to the Administrative Agent and the Borrower by written notice
as the office by which its Eurodollar Loans are made and maintained.
"Applicable Percentage" means for any day, the rate per annum set forth
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below opposite the applicable Combined Leverage Ratio then in effect, it
being understood that the Applicable Percentage for (i) Base Rate Loans
shall be the percentage set forth under the column "Base Rate Margin", (ii)
Eurodollar Loans shall be the percentage set forth under the column
"Eurodollar Margin and Letter of Credit Fee", (iii) the Letter of Credit
Fee shall be the percentage set forth under the column "Eurodollar Margin
and Letter of Credit Fee" and (iv) the Commitment Fee shall be the
percentage set forth under the column "Commitment Fee":
2
Eurodollar Margin
and
Pricing Base Rate Letter of Credit Commitment
Level Combined Leverage Ratio Margin Fee Fee
-------------- ------------------------------------------------ -------------- ---------------------- ----------------
I greater than 3.25 .75% 2.50% 0.40%
II greater than 2.75 but less than or equal to 3.25 .50% 2.25% 0.35%
III greater than 2.25 but less than or equal to 2.75 .25% 2.00% 0.30%
IV less than or equal to 2.25 00% 1.75% 0.25%
The Applicable Percentage shall be determined and adjusted on the date
(each a "Rate Determination Date") five (5) Business Days after the date by
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which each annual and quarterly compliance certificates and related
financial statements and information are required in accordance with the
provisions of Sections 7.1(a), (b) and (c) of the ▇▇▇▇▇▇▇▇'▇ Credit
Agreement, as appropriate, provided that:
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(i) the initial Applicable Percentages shall be based on pricing
level I until the first Rate Determination Date to occur in connection
with the delivery of the quarterly financial statements and appropriate
compliance certificate for the fiscal quarter ending October 31, 1999,
and
(ii) notwithstanding the foregoing, in the event an annual or
quarterly compliance certificate and related financial statements and
information are not delivered timely to the Agency Services Address by
the date required by Sections 7.1(a), (b) or (c) hereunder or under the
▇▇▇▇▇▇▇▇'▇ Credit Agreement, as appropriate, the Applicable Percentages
shall be based on pricing level I until such time as an appropriate
compliance certificate and related financial statements and information
are delivered, whereupon the applicable pricing level shall be adjusted
based on the information contained in such compliance certificate and
related financial statements and information.
Subject to the qualifications set forth above, each Applicable Percentage
shall be effective from a Rate Determination Date until the next such Rate
Determination Date. The Administrative Agent shall determine the
appropriate Applicable Percentages in the pricing matrix promptly upon
receipt of the quarterly or annual compliance certificate and related
financial information and shall promptly notify the Borrower and the
Lenders of any change thereof. Such determinations by the Administrative
Agent shall be conclusive absent manifest error. Adjustments in the
Applicable Percentages shall be effective as to existing Extensions of
Credit as well as new Extensions of Credit made thereafter.
"Asset Disposition" shall mean and include (i) the sale, lease or other
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disposition of any Property by any member of the Consolidated Group
(including the Capital Stock of a Subsidiary but excluding Capital Stock of
the Parent), and (ii) receipt by any member of the Consolidated Group of
any cash insurance proceeds or condemnation award payable by reason of
theft, loss, physical
3
destruction or damage, taking or similar event with respect to any of its
Property; but for purposes hereof shall not include, in any event, (A) the
sale of inventory in the ordinary course of business, (B) the sale, lease
or other disposition of machinery and equipment obsolete or no longer used
or useful in the conduct of business, (C) a sale, lease, transfer or
disposition of Property to a Domestic Credit Party (other than the Parent
or members of the ▇▇▇▇▇▇▇▇'▇ Consolidated Group) , (D) the sale or
disposition of Investments permitted pursuant to clause (i) of the
definition of Permitted Investments, and (E) the issuance of Capital Stock
of a Subsidiary to any member of the Consolidated Group or the issuance of
Capital Stock of a Subsidiary pro rata to all of its holders in a manner
that does not dilute the ownership interest of the members of the
Consolidated Group therein.
"Bank of America" means Bank of America, N.A., and its successors.
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"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the United
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States Code, as amended, modified, succeeded or replaced from time to time.
"Bankruptcy Event" means, with respect to any Person, the occurrence of
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any of the following with respect to such Person: (i) a court or
governmental agency having jurisdiction in the premises shall enter a
decree or order for relief in respect of such Person in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of such Person or
for any substantial part of its Property or ordering the winding up or
liquidation of its affairs; or (ii) there shall be commenced against such
Person an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or any case, proceeding or
other action for the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of such Person or
for any substantial part of its Property or for the winding up or
liquidation of its affairs, and such involuntary case or other case,
proceeding or other action shall remain undismissed, undischarged or
unbonded for a period of sixty (60) consecutive days; or (iii) such Person
shall commence a voluntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, or consent to the entry of
an order for relief in an involuntary case under any such law, or consent
to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of such
Person or for any substantial part of its Property or make any general
assignment for the benefit of creditors; or (iv) such Person shall be
unable to, or shall admit in writing its inability to, pay its debts
generally as they become due.
"Base Rate" means, for any day, the rate per annum equal to the higher
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of (a) the Federal Funds Rate for such day plus one-half of one percent
(0.5%) and (b) the Prime Rate for such day. Any change in the Base Rate due
to a change in the Prime Rate or the Federal Funds Rate shall be effective
on the effective date of such change in the Prime Rate or Federal Funds
Rate.
4
"Base Rate Loan" means any Loan bearing interest at a rate determined
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by reference to the Base Rate.
"Borrower" means Crescent Jewelers, a California corporation, as
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referenced in the opening paragraph, its successors and permitted assigns.
"Borrowing Base" means, as of any day, an amount equal to the sum of
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(i) Sixty-five percent (65%) of Eligible Receivables, plus (ii) the lesser
----
of (A) Fifty percent (50%) of Eligible Inventory or (B) $25 million, plus
----
(iii) $60 million (representing a portion of the Borrowing Base reserve
amount provided under the ▇▇▇▇▇▇▇▇'▇ Credit Agreement which reserve amount
shall be subject to adjustment at the discretion of the Required Lenders
based on financial information delivered to the Lenders pursuant to Section
7.1) or such greater or lesser amount agreed upon by ▇▇▇▇▇▇▇▇'▇ and the
Borrower which is otherwise reasonably acceptable to the Administrative
Agent, minus (iv) an amount equal to one month's rental expense for the
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Consolidated Group, minus (v) an amount determined by the Administrative
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Agent in its good faith discretion representing a reserve for obligations
owing under Hedging Agreements (determined and adjusted monthly on a
marked-to-market basis), in each case as set forth in the most recent
Borrowing Base Certificate delivered to the Administrative Agent and the
Lenders in accordance with Section 7.1(d) (subject to adjustments by the
Administrative Agent made in good faith to better reflect the actual state
and condition of the Borrowing Base); provided, however, that the foregoing
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advance rates against Eligible Receivables and Eligible Inventory may be
adjusted downward by the Administrative Agent in its good faith discretion
(and thereafter readjusted upward by the Administrative Agent in its good
faith discretion to rates not in excess of the original advance rates). The
Administrative Agent will give prompt notice to the Borrower and the
Lenders of any such adjustment in the applicable advance rates.
"Borrowing Base Certificate" shall have the meaning assigned to such
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term in Section 7.1(d).
"Business Day" means a day other than a Saturday, Sunday or other day
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on which commercial banks in Charlotte, North Carolina, Dallas, Texas,
Atlanta, Georgia, San Francisco, California or New York, New York are
authorized or required by law to close, except that, when used in
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connection with a Eurodollar Loan, such day shall also be a day on which
dealings between banks are carried on in Dollar deposits in London,
England.
"Capital Lease" means, as applied to any Person, any lease of any
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Property by that Person as lessee which, in accordance with GAAP, is or
should be accounted for as a capital lease on the balance sheet of that
Person.
"Capital Stock" means (i) in the case of a corporation, capital stock,
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(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated)
of capital stock,
5
(iii) in the case of a partnership, partnership interests (whether general
or limited), (iv) in the case of a limited liability company, membership
interests and (v) any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.
"Cash Equivalents" means (a) securities issued or directly and fully
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guaranteed or insured by the United States or any agency or instrumentality
thereof (provided that the full faith and credit of the United States is
pledged in support thereof) having maturities of not more than twelve
months from the date of acquisition, (b) Dollar denominated time deposits
and certificates of deposit of (i) any Lender, (ii) any domestic commercial
bank of recognized standing having capital and surplus in excess of
$500,000,000 or (iii) any bank whose short-term commercial paper rating
from S&P is at least A-1 or the equivalent thereof or from ▇▇▇▇▇'▇ is at
least P-1 or the equivalent thereof (any such bank being an "Approved
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Bank"), in each case with maturities of not more than 270 days from the
----
date of acquisition, (c) commercial paper and variable or fixed rate notes
issued by any Approved Bank (or by the parent company thereof) or any
variable rate notes issued by, or guaranteed by, any domestic corporation
rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the
equivalent thereof) or better by Moody's and maturing within six months of
the date of acquisition, (d) repurchase agreements entered into by any
Person with a bank or trust company (including any of the Lenders) or
recognized securities dealer having capital and surplus in excess of
$500,000,000 for direct obligations issued by or fully guaranteed by the
United States in which such Person shall have a perfected first priority
security interest (subject to no other Liens) and having, on the date of
purchase thereof, a fair market value of at least 100% of the amount of the
repurchase obligations and (e) Investments, classified in accordance with
GAAP as current assets, in money market investment programs registered
under the Investment Company Act of 1940, as amended, which are
administered by reputable financial institutions having capital of at least
$500,000,000 and the portfolios of which are limited to Investments of the
character described in the foregoing subdivisions (a) through (d).
"Change of Control" means the occurrence of any of the following
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events: (i) ▇▇▇▇▇▇▇ Ean ▇▇▇▇▇ shall fail to own and control, directly or
indirectly, Voting Stock of the Borrower in an amount sufficient to elect a
majority of the Parent's board of directors or (ii) during any period of up
to 12 consecutive months, commencing after the Closing Date, individuals
who at the beginning of such 12 month period were directors of the Parent
(together with any new director whose election by the Parent's board of
directors or whose nomination for election by the Parent's stockholders was
approved by a vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the directors of the Parent then in
office.
"Closing Date" means the date hereof.
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6
"Collateral" means a collective reference to the collateral which is
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identified in, and at any time will be covered by, the Collateral
Documents.
"Collateral Documents" means a collective reference to the ▇▇▇▇▇▇▇▇'▇
--------------------
Guaranty Agreement, the ▇▇▇▇▇▇▇▇'▇ Security Agreement, the ▇▇▇▇▇▇▇▇'▇
Pledge Agreement, the Security Agreement, the Pledge Agreement, the
Mortgages and such other documents executed and delivered in connection
with the attachment and perfection of the Administrative Agent's security
interests and liens arising thereunder, including without limitation, UCC
financing statements and patent and trademark filings.
"Combined Adjusted EBITDAR" means, as of any date of determination, the
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sum of (i) Consolidated Adjusted EBITDAR for the Crescent Consolidated
Group for the period of twelve consecutive fiscal months of the Crescent
Consolidated Group ending as of the date of determination, plus (ii)
Consolidated Adjusted EBITDAR for the ▇▇▇▇▇▇▇▇'▇ Consolidated Group for the
period of four consecutive fiscal quarters of the ▇▇▇▇▇▇▇▇'▇ Consolidated
Group ending as of the date of determination.
"Combined Adjusted Funded Debt" means, as of any date of determination,
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the sum of (i) Funded Debt of the Combined Group on such day plus (ii) an
----
amount equal to the product of (A) the sum of rents and lease expense for
the Crescent Consolidated Group for the period of twelve consecutive fiscal
months of the Crescent Consolidated Group ending as of the date of
determination, plus rents and lease expense for the ▇▇▇▇▇▇▇▇'▇ Consolidated
Group for the period of four consecutive fiscal quarters of the ▇▇▇▇▇▇▇▇'▇
Consolidated Group ending as of the date of determination, multiplied by
(B) five (5), in each case determined on a combined basis in accordance
with GAAP.
"Combined Group" means (i) the Crescent Consolidated Group and (ii) the
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▇▇▇▇▇▇▇▇'▇ Consolidated Group, on a combined basis.
"Combined Leverage Ratio" means, as of the last day of each fiscal
-----------------------
quarter of the ▇▇▇▇▇▇▇▇'▇ Consolidated Group, the ratio of (i) Combined
Adjusted Funded Debt on such day to (ii) Combined Adjusted EBITDAR as of
such day.
"Commitment Fee" shall have the meaning assigned to such term in
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Section 3.5(a).
"Commitments" means any of the Revolving Commitments, the LOC
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Commitments and/or the Swingline Commitments.
"Commitment Period" means the period from and including the Closing
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Date to but not including the earlier of (i) the Termination Date or (ii)
the date on which the Commitments terminate in accordance with the
provisions of this Credit Agreement.
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"Committed Amount" means the Revolving Committed Amount, the LOC
----------------
Committed Amount and/or the Swingline Committed Amount.
"Consolidated Adjusted EBITDAR" means, for any period for the
-----------------------------
Consolidated Group, the sum of (i) Consolidated EBITDA plus (ii) lease and
----
rent expense, in each case determined in accordance with GAAP. Except as
otherwise expressly provided, the applicable period shall be for the four
consecutive fiscal quarters ending as of the date of determination.
"Consolidated Capital Expenditures" means, for any period for the
---------------------------------
Consolidated Group, without duplication, all expenditures (whether paid in
cash or other consideration) during such period that, in accordance with
GAAP, are or should be included in additions to property, plant and
equipment or similar items reflected in the consolidated statement of cash
flows for such period; provided, that Consolidated Capital Expenditures
--------
shall not include, for purposes hereof, expenditures of proceeds of
insurance settlements, condemnation awards and other settlements in respect
of lost, destroyed, damaged or condemned assets, equipment or other
property to the extent such expenditures are made to replace or repair such
lost, destroyed, damaged or condemned assets, equipment or other property
or otherwise to acquire assets or properties useful in the business of the
members of the Consolidated Group.
"Consolidated EBITDA" means, for any period for the Consolidated Group,
-------------------
the sum of (i) Consolidated Net Income plus (ii) to the extent deducted in
----
determining net income, (A) Consolidated Interest Expense, (B) taxes and
(C) depreciation and amortization, in each case on a consolidated basis
determined in accordance with GAAP. Except as otherwise expressly provided,
the applicable period shall be for the four consecutive fiscal quarters
ending as of the date of determination.
"Consolidated Fixed Charge Coverage Ratio" means, for any period, the
----------------------------------------
ratio of Consolidated Adjusted EBITDAR to Consolidated Fixed Charges.
"Consolidated Fixed Charges" means, for any period for the Consolidated
--------------------------
Group, the sum of (i) the cash portion of Consolidated Interest Expense for
such period, plus (ii) scheduled current maturities of Consolidated Funded
----
Debt (including, for purposes hereof, mandatory commitment reductions,
sinking fund payments, payments in respect of the principal component under
Capital Leases and the like relating thereto) for the four consecutive
fiscal quarters beginning the day after the date of determination plus
----
(iii) lease and rent expense for such period, plus (iv) Restricted
----
Payments, in each case determined in accordance with GAAP; provided,
--------
however, the Crescent Guaranty Fee shall be excluded from the calculation
-------
of Consolidated Fixed Charges. Except as otherwise expressly provided, the
applicable period shall be for the four consecutive fiscal quarters ending
as of the date of determination.
8
"Consolidated Group" means the Crescent Consolidated Group, except that
------------------
solely for purposes of determining the Combined Leverage Ratio and its
components, then the Crescent Consolidated Group and/or the ▇▇▇▇▇▇▇▇'▇
Consolidated Group, as the context requires.
"Consolidated Interest Expense" means, for any period for the
-----------------------------
Consolidated Group, all interest expense, including the amortization of
debt discount and premium, the interest component under Capital Leases and
the implied interest component under Securitization Transactions, in each
case on a consolidated basis determined in accordance with GAAP applied on
a consolidated basis; provided that, notwithstanding the foregoing, for any
--------
period ending prior to October 31, 2000, Consolidated Interest Expense
shall be determined by annualization of Consolidated Interest Expense for
complete fiscal quarters ending after the Closing Date, such that (i) for
the fiscal quarter ending January 31, 2000, Consolidated Interest Expense
shall be the result obtained by multiplying Consolidated Interest Expense
for the fiscal quarter then ending by four (4); (ii) for the fiscal quarter
ending April 30, 2000, Consolidated Interest Expense shall be the result
obtained by multiplying Consolidated Interest Expense for the period of two
fiscal quarters then ending by two (2); (iii) for the fiscal quarter ending
July 31, 2000, Consolidated Interest Expense shall be the result obtained
by multiplying Consolidated Interest Expense for the period of three fiscal
quarters then ending by one and one-third (1-1/3); and (iv) for the fiscal
quarter ending October 31, 2000 and each fiscal quarter thereafter,
Consolidated Interest Expense shall be for the period of four consecutive
fiscal quarters ending as of the date of determination.
"Consolidated Net Income" means, for any period for the Consolidated
-----------------------
Group, net income determined on a consolidated basis in accordance with
GAAP, but excluding for purposes hereof, extraordinary non-cash or non-
recurring non-cash gains and losses or charges, and related tax effects
thereon. Except as otherwise expressly provided, the applicable period
shall be for the four consecutive fiscal quarters ending as of the date of
determination.
"Continue", "Continuation", and "Continued" shall refer to the
-------- ------------ ---------
continuation pursuant to Section 3.2 hereof of a Eurodollar Loan from one
Interest Period to the next Interest Period.
"Contractual Obligation" means, as to any Person, any provision of any
----------------------
security issued by such Person or of any material agreement, instrument or
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Convert", "Conversion", and "Converted" shall refer to a conversion
------- ---------- ---------
pursuant to Section 3.2 or Sections 3.7 through 3.12, inclusive, of a Base
Rate Loan into a Eurodollar Loan.
9
"Credit Documents" means a collective reference to this Credit
----------------
Agreement, the Notes, the LOC Documents (excluding any Letter of Credit),
each Joinder Agreement, the Administrative Agent's Fee Letter, the
Collateral Documents and all other related agreements and documents issued
or delivered hereunder or thereunder or pursuant hereto or thereto (in each
case as the same may be amended, modified, restated, supplemented,
extended, renewed or replaced from time to time), and "Credit Document"
---------------
means any one of them.
"Credit Parties" means a collective reference to the Borrower and the
--------------
Guarantors, and "Credit Party" means any one of them.
------------
"Crescent Consolidated Group" means the Parent and its consolidated
---------------------------
subsidiaries (including the Borrower hereunder), as determined in
accordance with GAAP.
"Crescent Guarantors" means Guarantors hereunder which are members of
-------------------
the Crescent Consolidated Group.
"Crescent Guaranty Fee" means a fee payable by Crescent to ▇▇▇▇▇▇▇▇'▇
---------------------
equal to 2% per annum of the average amount of the Guaranteed Obligations
(as defined in the ▇▇▇▇▇▇▇▇'▇ Guaranty) during the preceding fiscal
quarter. The Crescent Guaranty Fee will be paid in arrears on the 15th day
after the end of each fiscal quarter. The calculation of the Crescent
Guaranty Fee will be made by the Chief Financial Officer of Crescent and
certified to ▇▇▇▇▇▇▇▇'▇ in writing within 10 days after the end of each
fiscal quarter. In the event the Crescent Guaranty Fee is not timely paid,
interest shall accrue on the fee commencing as of the end of the fiscal
quarter at the Base Rate plus 2%.
"Default" means any event, act or condition which with notice or lapse
-------
of time, or both, would constitute an Event of Default.
"Defaulting Lender" means, at any time, any Lender that (a) has failed
-----------------
to make a Loan or purchase a Participation Interest required pursuant to
the terms of this Credit Agreement within one Business Day of when due, (b)
other than as set forth in (a) above, has failed to pay to the
Administrative Agent or any Lender an amount owed by such Lender pursuant
to the terms of this Credit Agreement within one Business Day of when due,
unless such amount is subject to a good faith dispute or (c) has been
deemed insolvent or has become subject to a bankruptcy or insolvency
proceeding or with respect to which (or with respect to any of the assets
of which) a receiver, trustee or similar official has been appointed.
"Documentation Agent" shall have the meaning assigned to such term in
-------------------
the heading hereof, together with any successors or assigns.
"Dollars" and "$" means dollars in lawful currency of the United
------- -
States.
10
"Domestic Credit Party" means any Credit Party which is incorporated or
---------------------
organized under the laws of any State of the United States or the District
of Columbia.
"Domestic Subsidiary" means any Subsidiary which is incorporated or
-------------------
organized under the laws of any State of the United States or the District
of Columbia.
"Eligible Assignee" means (i) a Lender; (ii) an affiliate of a Lender;
-----------------
and (iii) any other Person approved by the Administrative Agent and, unless
an Event of Default has occurred and is continuing at the time any
assignment is effected in accordance with Section 11.3, the Borrower (such
approval by the Administrative Agent or the Borrower not to be unreasonably
withheld or delayed and such approval to be deemed given by the Borrower if
no objection is received by the assigning Lender and the Administrative
Agent from the Borrower within two Business Days after notice of such
proposed assignment has been provided by the assigning Lender to the
Borrower); provided, however, that neither the Borrower nor an Affiliate of
-------- -------
the Borrower shall qualify as an Eligible Assignee.
"Eligible Inventory" means, as of any date of determination and
------------------
without duplication, the lower of the aggregate book value (based on a FIFO
or a moving average cost valuation, consistently applied) or fair market
value of all raw materials and finished goods inventory owned by the
Borrower and its Domestic Subsidiaries less reserves against inventory
shrinkage as are reasonably satisfactory to the Administrative Agent and
other appropriate reserves determined in accordance with GAAP but excluding
in any event (i) inventory which is (a) not subject to a perfected, first
priority (subject to inchoate Liens for government charges or assessments
not yet due) Lien in favor for the Administrative Agent to secure the
Obligations or (b) subject to any other Lien that is not a Permitted Lien,
(ii) inventory which is not in good condition or fails to meet standards
for sale or use imposed by governmental agencies, departments or divisions
having regulatory authority over such goods, (iii) inventory which is not
useable or salable at prices approximating their cost in the ordinary
course of the business (including without duplication the amount of any
reserves for obsolescence, unsalability or decline in value), (iv)
inventory located outside of the United States or in transit (other than
between locations operated by the Borrower and the Crescent Guarantors),
(v) inventory which is leased or on consignment and (vi) inventory which
fails to meet such other specifications and requirements as may from time
to time be established by the Administrative Agent in its reasonable
discretion.
"Eligible Receivables" means, as of any date of determination and
--------------------
without duplication, the aggregate book value of all accounts receivable,
receivables, and obligations for payment created or arising from the sale
of inventory or the rendering of services in the ordinary course of
business (collectively, the "Receivables"), owned by or owing to the
-----------
Borrower and its Domestic Subsidiaries, net of allowances and reserves for
sales adjustments, unearned finance charges,
11
unearned insurance premiums and sales tax consistent with such Person's
internal policies and in any event in accordance with GAAP, but excluding
in any event (i) any Receivable which is (A) not subject to a perfected,
first priority (subject to incohate Liens for government charges or
assessments not yet due) Lien in favor of the Administrative Agent to
secure the Obligations, (B) subject to any other Lien that is not a
Permitted Lien or (C) not in compliance with applicable laws (including
those regarding consumer protection and truth-in-lending), (ii) doubtful or
uncollectible Receivables (including, without limitation, those which are
more than 60 days past due) (net of reserves for bad debts in connection
with any such Receivables), (iii) 50% of the book value of any Receivable
not otherwise excluded by clause (ii) above (A) which is a restructured or
rewritten account or (B) is owing from an account debtor which is the
account debtor on any existing Receivable then excluded by such clause
(ii), unless the exclusion by such clause (ii) is a result of a legitimate
dispute by the account debtor and the applicable Receivable is no more than
90 days past due, (iv) Receivables arising from contracts with a term of
more than 24 months to the extent the book value of any such Receivable
exceeds 1% of the book value of all Eligible Receivables (v) Receivables
evidenced by notes, chattel paper or other instruments, unless the
covenants set forth in the Security Agreement applicable to such notes,
chattel paper or instruments have been complied with, (vi) Receivables
owing by an account debtor which is not solvent or is subject to any
bankruptcy or insolvency proceeding of any kind or which has died or been
declared judicially incompetent, (vii) Receivables owing by an account
debtor located outside of the United States (unless payment for the goods
shipped is secured by an irrevocable letter of credit in a form and from an
institution acceptable to the Administrative Agent), (viii) Receivables
which are contingent or subject to offset, deduction, counterclaim, dispute
or other defense to payment, in each case to the extent of such offset,
deduction, counterclaim, dispute or other defense, (ix) Receivables for
which any direct or indirect Subsidiary, employee or any Affiliate is the
account debtor, (x) Receivables representing a sale to the government of
the United States or any subdivision thereof unless the Federal Assignment
of Claims Act has been complied with to the satisfaction of the
Administrative Agent with respect to the granting of a security interest in
such Receivable, with or other similar applicable law, (xi) Receivables
with respect to which any of the representations, warranties, covenants,
and agreements contained in the Credit Documents are not or have ceased to
be complete and correct or have been breached, (xii) Receivables which
represent a sale on a ▇▇▇▇-and-hold, guaranteed sale, sale and return, sale
on approval, consignment, or other repurchase or return basis and (xiii)
Receivables which fail to meet such other specifications and requirements
as may from time to time be established by the Administrative Agent in its
reasonable discretion.
"Eligible Real Property" means, with respect to any member of the
----------------------
Consolidated Group, including any Person that becomes a member of the
Consolidated Group after the Closing Date as contemplated by Section 7.12,
any real property (wherever located) which (i) is owned or leased by such
member of the Consolidated Group and (ii) is not Excluded Property.
12
"Environmental Laws" means any and all lawful and applicable federal,
------------------
state, local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, concessions, grants, franchises,
licenses, agreements and other governmental restrictions relating to the
environment or to emissions, discharges, releases or threatened releases of
Materials of Environmental Concern into the environment including, without
limitation, ambient air, surface water, ground water, or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of Materials of Environmental
Concern.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended, and any successor statute thereto, as interpreted by the rules and
regulations thereunder, all as the same may be in effect from time to time.
References to sections of ERISA shall be construed also to refer to any
successor sections.
"ERISA Affiliate" means an entity which is under common control with
---------------
any member of the Consolidated Group within the meaning of Section
4001(a)(14) of ERISA, or is a member of a group which includes any member
of the Consolidated Group and which is treated as a single employer under
Sections 414(b) or (c) of the Internal Revenue Code.
"ERISA Affiliate Plan" means any employee benefit plan (as defined in
--------------------
Section 3(3) of ERISA) which is covered by ERISA and with respect to which
any ERISA Affiliate that is not a member of the Consolidated Group is (or,
if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an "employer" within the meaning of Section 3(5) of
ERISA.
"ERISA Event" means (i) with respect to any Plan, the occurrence of a
-----------
Reportable Event or the substantial cessation of operations (within the
meaning of Section 4062(e) of ERISA); (ii) the withdrawal by any member of
the Consolidated Group from a Multiple Employer Plan during a plan year in
which it was a substantial employer (as such term is defined in Section
4001(a)(2) of ERISA), or the termination of a Multiple Employer Plan; (iii)
the distribution of a notice of intent to terminate or the actual
termination of a Plan pursuant to Section 4041(a)(2) or 4041A of ERISA;
(iv) the institution of proceedings to terminate or the actual termination
of a Plan by the PBGC under Section 4042 of ERISA; (v) any event or
condition which might constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any
Plan; (vi) the complete or partial withdrawal of any member of the
Consolidated Group from a Multiemployer Plan; (vii) the conditions for
imposition of a lien under Section 302(f) of ERISA exist with respect to
any Plan; or (viii) the adoption of an amendment to any Plan requiring the
provision of security to such Plan pursuant to Section 307 of ERISA.
"Eurodollar Loan" means any Loan that bears interest at a rate based
---------------
upon the Eurodollar Rate.
13
"Eurodollar Rate" means, for any Eurodollar Loan for any Interest
---------------
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) determined by the Administrative Agent to be equal to
the quotient obtained by dividing (a) the Interbank Offered Rate for such
Eurodollar Loan for such Interest Period by (b) 1 minus the Eurodollar
Reserve Requirement for such Eurodollar Loan for such Interest Period.
"Eurodollar Reserve Requirement" means, at any time, the maximum rate
------------------------------
at which reserves (including, without limitation, any marginal, special,
supplemental, or emergency reserves) are required to be maintained under
regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) by member banks of the Federal
Reserve System against "Eurocurrency liabilities" (as such term is used in
Regulation D). Without limiting the effect of the foregoing, the Eurodollar
Reserve Requirement shall reflect any other reserves required to be
maintained by such member banks with respect to (i) any category of
liabilities which includes deposits by reference to which the Eurodollar
Rate is to be determined, or (ii) any category of extensions of credit or
other assets which include Eurodollar Loans. The Eurodollar Rate shall be
adjusted automatically on and as of the effective date of any change in the
Eurodollar Reserve Requirement.
"Event of Default" shall have the meaning assigned to such term in
----------------
Section 9.1.
"Excluded Property" means, with respect to any member of the
-----------------
Consolidated Group, including any Person that becomes a member of the
Consolidated Group after the Closing Date as contemplated by Section 7.12,
any Property of such member of the Consolidated Group which, subject to the
terms of Section 8.12, is subject to a Lien of the type described in clause
(viii) of the definition of "Permitted Liens" pursuant to documents which
prohibit such member of the Consolidated Group from granting any other
Liens in such Property.
"Executive Officer" of any Person means any of the chief executive
-----------------
officer, chief operating officer, president, chief accounting officer and
chief financial officer of such Person.
"Existing Letters of Credit" means those Letters of Credit outstanding
--------------------------
on the Closing Date and identified on Schedule 2.6(b).
---------------
"Extension of Credit" means, as to any Lender, the making of, or
-------------------
participation in, a Loan by such Lender (including Continuations and
Conversions thereof) or the issuance or extension of, or participation in,
a Letter of Credit by such Lender.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
------------------
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve
14
System arranged by Federal funds brokers on such day, as published by the
Federal Reserve Bank of New York on the Business Day next succeeding such
day; provided that (a) if such day is not a Business Day, the Federal Funds
--------
Rate for such day shall be such rate on such transactions on the next
preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate charged
to the Administrative Agent (in its individual capacity) on such day on
such transactions as determined by the Administrative Agent.
"Fees" means all fees payable pursuant to Section 3.5.
----
"Foreign Credit Party" means a Credit Party which is not a Domestic
--------------------
Credit Party.
"Foreign Subsidiary" means a Subsidiary which is not a Domestic
------------------
Subsidiary.
"▇▇▇▇▇▇▇▇'▇" means ▇▇▇▇▇▇▇▇'▇ Inc., a Delaware corporation.
----------
"▇▇▇▇▇▇▇▇'▇ Consolidated Group" means ▇▇▇▇▇▇▇▇'▇ and its consolidated
-----------------------------
subsidiaries, as determined in accordance with GAAP.
"▇▇▇▇▇▇▇▇'▇ Credit Agreement" means that Credit Agreement dated as of
---------------------------
the Closing Date, as amended, modified, extended, renewed or replaced,
among ▇▇▇▇▇▇▇▇'▇, as borrower, the subsidiaries and affiliates identified
therein, as guarantors, the lenders identified therein, and Bank of
America, N.A., as Administrative Agent.
"▇▇▇▇▇▇▇▇'▇ Guarantors" means Guarantors hereunder which are members of
---------------------
the ▇▇▇▇▇▇▇▇'▇ Consolidated Group.
"▇▇▇▇▇▇▇▇'▇ Guaranty Agreement" means that Guaranty Agreement dated as
-----------------------------
of the date hereof, as amended, modified, extended, renewed or replaced,
given by ▇▇▇▇▇▇▇▇'▇ to the Administrative Agent with respect to the
obligations of the Borrower hereunder and under the other Credit Documents.
"▇▇▇▇▇▇▇▇'▇ Pledge Agreement" means the pledge agreement given by
---------------------------
▇▇▇▇▇▇▇▇'▇ and its subsidiaries and affiliates identified therein to Bank
of America, N.A., as collateral agent to secure the loans and obligations
owing hereunder, and under the other Credit Documents and the loans and
obligations owing under the ▇▇▇▇▇▇▇▇'▇ Credit Agreement and the other
Credit Documents thereunder, as such Pledge Agreement may be amended and
modified from time to time.
"▇▇▇▇▇▇▇▇'▇ Security Agreement" means the Security Agreement dated as
-----------------------------
of the Closing Date given by ▇▇▇▇▇▇▇▇'▇ and its subsidiaries and affiliates
identified therein to Bank of America, N.A., as collateral agent, to secure
the loans and obligations owing hereunder and under the other Credit
Documents and the loans and obligations
15
owing under the ▇▇▇▇▇▇▇▇'▇ Credit Agreement and the other Credit Documents
thereunder, as such Security Agreement may be amended and modified from
time to time.
"Funded Debt" means, with respect to any Person, without duplication,
-----------
(i) all obligations of such Person for borrowed money (other than, to the
extent it may be included herein, trade debt incurred in the ordinary
course of business), (ii) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, or upon which interest
payments are customarily made (other than, to the extent it may be included
herein, trade debt incurred in the ordinary course of business), (iii) all
purchase money Indebtedness (including for purposes hereof, indebtedness
and obligations in respect of conditional sale or title retention
arrangements described in clause (c) of the definition of "Indebtedness"
and obligations in respect of the deferred purchase price of property or
services described in clause (d) of the definition of "Indebtedness") of
such Person, including without limitation the principal portion of all
obligations of such Person outstanding under Capital Leases, (iv) all
Support Obligations of such Person with respect to Funded Debt of another
Person, (v) the maximum available amount of all standby letters of credit
or acceptances issued or created for the account of such Person, (vi) all
Funded Debt of another Person secured by a Lien on any Property of such
Person, whether or not such Funded Debt has been assumed, provided that for
--------
purposes hereof the amount of such Funded Debt shall be limited to the
amount of such Funded Debt as to which there is recourse to such Person or
the fair market value of the property which is subject to the Lien, if
less, (vii) the outstanding attributed principal amount under any
Securitization Transaction, and (viii) the principal portion of obligations
outstanding under Synthetic Leases. The Funded Debt of any Person shall
include the Funded Debt of any partnership or joint venture in which such
Person is a general partner or joint venturer, but only to the extent to
which there is recourse to such Person for the payment of such Funded Debt.
"GAAP" means generally accepted accounting principles in the United
----
States applied on a consistent basis and subject to the terms of Section
1.3.
"Governmental Authority" means any Federal, state, local or foreign
----------------------
court or governmental agency, authority, instrumentality or regulatory
body.
"Guaranteed Obligations" means, without duplication, (i) all of the
----------------------
obligations of the Borrower to the Lenders (including the Issuing Lender)
and the Administrative Agent, whenever arising, under this Credit
Agreement, the Notes, the Collateral Documents or any of the other Credit
Documents (including, but not limited to, any interest accruing after the
occurrence of a Bankruptcy Event with respect to the Borrower or any
Crescent Guarantor, regardless of whether such interest is an allowed claim
under the Bankruptcy Code) and (ii) all liabilities and obligations,
whenever arising, owing by the Borrower to any Lender, or any Affiliate of
a Lender, arising under any Hedging Agreement relating to the Obligations
hereunder to the extent permitted hereunder.
16
"Guarantors" means ▇▇▇▇▇▇▇▇'▇, the Parent, each Person identified as a
----------
"Guarantor" on the signature pages hereto and each other Person which may
hereafter become a Guarantor by execution of a Joinder Agreement or
guaranty agreement reasonably acceptable to the Administrative Agent and
the Required Lenders, together with their successors and permitted assigns,
and "Guarantor " means any one of them.
---------
"Hedging Agreements" means any interest rate protection agreement or
------------------
foreign currency exchange agreement.
"Indebtedness" means, with respect to any Person, without duplication,
------------
(a) all indebtedness for borrowed money (other than, to the extent it may
be included herein, trade debt incurred in the ordinary course of
business), (b) all indebtedness and obligations evidenced by bonds,
debentures, notes or similar instruments, or upon which interest payments
are customarily made (other than, to the extent it may be included herein,
trade debt incurred in the ordinary course of business), (c) all
obligations under conditional sale or other title retention agreements
relating to Property purchased (other than customary reservations or
retentions of title under agreements with suppliers entered into in the
ordinary course of business, including, without limitation, the consignment
of inventory), (d) all obligations issued or assumed as the deferred
purchase price of Property or services purchased (other than trade debt
incurred in the ordinary course of business) which would appear as
liabilities on a balance sheet, (e) all obligations of such Person under
take-or-pay or similar arrangements or under commodities agreements, (f)
all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on, or payable out of the proceeds of production from,
Property owned or acquired, whether or not the obligations secured thereby
have been assumed, (g) all Support Obligations with respect to Indebtedness
of another Person, (h) the principal portion of all obligations outstanding
under Capital Leases, (i) all obligations under Hedging Agreements, (j) the
maximum amount of all standby letters of credit issued or bankers'
acceptances facilities for the account of such Person and, without
duplication, all drafts drawn thereunder (to the extent unreimbursed), (k)
all preferred Capital Stock which by the terms thereof could be (at the
request of the holders thereof or otherwise) subject to mandatory sinking
fund payments, redemption or other acceleration (other than as a result of
a Change of Control or an Asset Disposition that does not in fact result in
a redemption of such preferred Capital Stock) at any time during the term
of the Credit Agreement, (l) the principal portion of obligations
outstanding under Synthetic Leases, (m) the Indebtedness of any partnership
or unincorporated joint venture in which such Person is a general partner
or a joint venturer, and (n) the outstanding attributed principal amount
under any Securitization Transaction.
"Interbank Offered Rate" means, for any Eurodollar Loan for any
----------------------
Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or
any successor page) as the London interbank offered rate for deposits in
Dollars at approximately 11:00 A.M. (London
17
time) two Business Days prior to the first day of such Interest Period for
a term comparable to such Interest Period. If for any reason such rate is
not available, the term "Interbank Offered Rate" shall mean, for any
Eurodollar Loan for any Interest Period therefor, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Reuters Screen LIBO Page as the London interbank offered rate for deposits
in Dollars at approximately 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period for a term comparable to
such Interest Period; provided, however, if more than one rate is specified
-------- -------
on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic
mean of all such rates (rounded upwards, if necessary, to the nearest 1/100
of 1%).
"Interest Payment Date" means (i) as to any Base Rate Loan (other than
---------------------
a Swingline Loan), the last day of each calendar month and the Termination
Date, (ii) as to any Swingline Loan, the last day of each Interest Period
for such Loan, the date of repayment of principal of such Loan and the
Termination Date, or such other days as may be mutually agreed upon by the
Borrower and the Swingline Lender, and (iii) as to any Eurodollar Loan, the
last day of each Interest Period for such Loan, the date of repayment of
principal of such Loan and the Termination Date, and in addition where the
applicable Interest Period is more than three months, then also on the date
three months from the beginning of the Interest Period, and each three
months thereafter. If an Interest Payment Date falls on a date which is not
a Business Day, such Interest Payment Date shall be deemed to be the next
succeeding Business Day.
"Interest Period" means (i) as to any Eurodollar Loan, a period of one,
---------------
two, three or six months' duration, as the Borrower may elect, commencing
in each case on the date of the borrowing (including Conversions,
Continuations and renewals) and (ii) as to any Swingline Loan, a period of
such duration as the Borrower may request and the Swingline Lender may
agree in accordance with the provisions of Section 2.2(a)(iii), commencing
in each case on the date of borrowing; provided, however, (A) if any
-------- -------
Interest Period would end on a day which is not a Business Day, such
Interest Period shall be extended to the next succeeding Business Day
(except that in the case of Eurodollar Loans where the next succeeding
Business Day falls in the next succeeding calendar month, then on the next
preceding Business Day), (B) no Interest Period shall extend beyond the
Termination Date, and (C) in the case of Eurodollar Loans, where an
Interest Period begins on a day for which there is no numerically
corresponding day in the calendar month in which the Interest Period is to
end, such Interest Period shall end on the last day of such calendar month.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
---------------------
amended, and any successor statute thereto, as interpreted by the rules and
regulations issued thereunder, in each case as in effect from time to time.
References to sections of the Internal Revenue Code shall be construed also
to refer to any successor sections.
"Investment" in any Person means (a) the acquisition (whether for cash,
----------
property, services, assumption of Indebtedness, securities or otherwise) of
Capital Stock, bonds, notes, debentures, partnership, joint ventures or
other ownership
18
interests or other securities of such other Person, (b) any deposit with,
or advance, loan or other extension of credit to, such Person (other than
deposits made in connection with the purchase of equipment or other assets
in the ordinary course of business) or (c) any other capital contribution
to or investment in such Person, including, without limitation, any Support
Obligations (including any support for a letter of credit issued on behalf
of such Person) incurred for the benefit of such Person, but excluding any
Restricted Payment to such Person.
"Issuing Lender" means, as to Existing Letters of Credit, those Lenders
--------------
identified as such on Schedule 2.6(b), and as to Letters of Credit issued
hereunder, Bank of America.
"Joinder Agreement" means a Joinder Agreement substantially in the form
-----------------
of Schedule 7.12 hereto, executed and delivered by a Domestic Subsidiary in
-------------
accordance with the provisions of Section 7.12.
"Lenders" means each of the Persons identified as a "lender" on the
-------
signature pages hereto, and their successors and assigns.
"Letter of Credit" means any Existing Letter of Credit and any letter
----------------
of credit issued by the Issuing Lender for the account of the Borrower in
accordance with the terms of Section 2.1(b).
"Letter of Credit Fee" shall have the meaning assigned to such term in
--------------------
Section 3.5(b)(i).
"Licenses" means all licenses, permits and other grants of authority
--------
obtained or required to be obtained from any Governmental Authorities in
connection with the management or operation of the business of the members
of the Consolidated Group or the ownership, lease, license or use of any
Property of the members of the Consolidated Group.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, security interest, encumbrance, lien (statutory or otherwise),
preference, priority or charge of any kind (including any agreement to give
any of the foregoing, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the
Uniform Commercial Code as adopted and in effect in the relevant
jurisdiction or other similar recording or notice statute, and any lease in
the nature thereof).
"Loan" or "Loans" means the Revolving Loans and/or the Swingline Loans,
---- -----
and the Base Rate Loans, Eurodollar Loans and Quoted Rate Swingline Loans
comprising such Loans.
"LOC Commitment" means the commitment of the Issuing Lender to issue,
--------------
and of the Lenders to participate in, Letters of Credit and LOC Obligations
hereunder.
19
"LOC Committed Amount" means the maximum amount of LOC Obligations
--------------------
hereunder. The initial LOC Committed Amount on the Closing Date is
referenced in Section 2.1(b).
"LOC Documents" means, with respect to any Letter of Credit, such
-------------
Letter of Credit, any amendments thereto, any documents delivered in
connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in application
or applicable only to such Letter of Credit) governing or providing for (i)
the rights and obligations of the parties concerned or at risk or (ii) any
collateral security for such obligations.
"LOC Obligations" means, at any time, the sum of (i) the maximum amount
---------------
which is, or at any time thereafter may become, available to be drawn under
Letters of Credit then outstanding, assuming compliance with all
requirements for drawings referred to in such Letters of Credit plus (ii)
----
the aggregate amount of all drawings under Letters of Credit honored by the
Issuing Lender but not theretofore reimbursed.
"Material Adverse Effect" means a material adverse effect on (i) the
-----------------------
condition (financial or otherwise), operations, business, assets or
liabilities of the Consolidated Group taken as a whole, (ii) the ability of
any Credit Party or other party thereto to perform any material obligation
under the Credit Documents to which it is a party or (iii) the material
rights and remedies of the Administrative Agent and the Lenders under the
Credit Documents.
"Materials of Environmental Concern" means any gasoline or petroleum
----------------------------------
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Laws, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., or any successor or
-------
assignee of the business of such company in the business of rating
securities.
"Mortgaged Property" means the Property which is the subject of a
------------------
Mortgage as referenced therein.
"Mortgages" means those mortgages, deeds of trust, security deeds or
---------
like instruments given to the Administrative Agent, for the ratable benefit
of the Lenders, to secure the Loans and obligations owing hereunder and
under the other Credit Documents, as amended and modified from time to
time.
"Multiemployer Plan" means a Plan which is a "multiemployer plan" as
------------------
defined in Sections 3(37) or 4001(a)(3) of ERISA.
20
"Multiple Employer Plan" means a Plan (other than a Multiemployer Plan)
----------------------
which any member of the Consolidated Group or any ERISA Affiliate and at
least one employer other than the members of the Consolidated Group or any
ERISA Affiliate are contributing sponsors.
"Note" or "Notes" means any of the Revolving Notes.
---- -----
"Notice of Borrowing" means a written notice of borrowing in
-------------------
substantially the form of Schedule 2.2(a)(i), as required by Section
------------------
2.2(a)(i) and Section 2.2(a)(iii).
"Notice of Continuation/Conversion" means the written notice of
---------------------------------
Continuation or Conversion in substantially the form of Schedule 3.2, as
------------
required by Section 3.2.
"Obligations" means, collectively, the Revolving Loans, the Swingline
-----------
Loans and the LOC Obligations.
"Operating Lease" means, as applied to any Person, any lease
---------------
(including, without limitation, leases which may be terminated by the
lessee at any time) of any Property as lessee which is not a Capital Lease.
"Other Taxes" shall have the meaning assigned to such term in Section
-----------
3.11.
"Parent" means Crescent Jewelers, Inc., a Delaware corporation, as
------
referenced in the opening paragraph, its successors and permitted assigns.
"Participation Interest" means the purchase by a Lender of a
----------------------
participation in LOC Obligations as provided in Section 2.6(b), in
Swingline Loans as provided in Section 2.7 and in Loans as provided in
Section 3.13.
"PBGC" means the Pension Benefit Guaranty Corporation established
----
pursuant to Subtitle A of Title IV of ERISA and any successor thereof.
"Permitted Investments" means Investments which are (i) cash and Cash
---------------------
Equivalents; (ii) accounts receivable created, acquired or made in the
ordinary course of business and payable or dischargeable in accordance with
customary trade terms; (iii) Investments consisting of Capital Stock,
obligations, securities or other Property received in settlement of
accounts receivable (created in the ordinary course of business) from
bankrupt obligors; (iv) Investments existing as of the Closing Date and set
forth in Schedule 8.6; (v) advances or loans to directors, officers and
------------
employees in the ordinary course of business for reasonable business
expenses that do not exceed $1,000,000 in the aggregate at any one time
outstanding; (vi) advances or loans to customers and suppliers in the
ordinary course of business that do not exceed $1,000,000 in the aggregate
at any one time outstanding; (vii) Investments by members of the
Consolidated Group in their Subsidiaries and Affiliates existing on the
Closing Date, (viii) Investments by members of the Consolidated Group in
and to Domestic Credit Parties (including ▇▇▇▇▇▇▇▇'▇ or other members of
the
21
▇▇▇▇▇▇▇▇'▇ Consolidated Group) and (ix) Investments of a nature not
contemplated in the foregoing subsections in an amount not to exceed
$1,000,000 in the aggregate at any time outstanding.
"Permitted Liens" means:
---------------
(i) Liens in favor of the Administrative Agent to secure the Loans
and obligations owing hereunder and under the other Credit Documents;
(ii) Liens in favor of a Lender or an affiliate of a Lender pursuant
to a Hedging Agreement permitted hereunder, but only (A) to the extent such
Liens secure obligations under such agreements permitted under Section 8.1,
(B) to the extent such Liens are on the same collateral as to which the
Lenders hereunder also have a Lien, and (C) so long as the obligations
under such Hedging Agreement and the loans and obligations hereunder and
under the other Credit Documents shall share pari passu in the collateral
subject to such Liens;
(iii) Liens (other than Liens created or imposed under ERISA) for
taxes, assessments or governmental charges or levies not yet due or Liens
for taxes being contested in good faith by appropriate proceedings for
which adequate reserves determined in accordance with GAAP have been
established (and as to which the Property subject to any such Lien is not
yet subject to foreclosure, sale or loss on account thereof);
(iv) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and suppliers and other Liens imposed by law or
pursuant to customary reservations or retentions of title arising in the
ordinary course of business, provided that such Liens secure only amounts
--------
not yet due and payable or, if due and payable, are unfiled and no other
action has been taken to enforce the same or are being contested in good
faith by appropriate proceedings for which adequate reserves determined in
accordance with GAAP have been established (and as to which the Property
subject to any such Lien is not yet subject to foreclosure, sale or loss on
account thereof);
(v) Liens (other than Liens created or imposed under ERISA) incurred
or deposits made by any member of the Consolidated Group in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the performance
of tenders, statutory obligations, bids, leases, government contracts,
performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money);
(vi) Liens in connection with attachments or judgments (including
judgment or appeal bonds) provided that the attachments or the judgments
--------
secured shall, within 30 days after the entry thereof, have been discharged
or execution thereof stayed
22
pending appeal, or shall have been discharged within 30 days after the
expiration of any such stay;
(vii) easements, rights-of-way, restrictions (including zoning
restrictions), minor defects or irregularities in title and other similar
charges or encumbrances not, in any material respect, impairing the use of
the encumbered Property for its intended purposes;
(viii) Liens on Property of any Person securing purchase money
Indebtedness (including Capital Leases and Synthetic Leases) of such Person
to the extent permitted under Section 8.1(c), provided that any such Lien
--------
attaches only to the Property financed or leased and such Lien attaches
concurrently with or within 90 days after the acquisition thereof;
(ix) leases or subleases granted to others not interfering in any
material respect with the business of any member of the Consolidated Group;
(x) any interest or title of a lessor under, and Liens arising from
UCC financing statements (or equivalent filings, registrations or
agreements in foreign jurisdictions) relating to, leases not prohibited by
this Credit Agreement;
(xi) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(xii) Liens deemed to exist in connection with Investments in
repurchase agreements which constitute Permitted Investments;
(xiii) normal and customary rights of setoff upon deposits of cash in
favor of banks or other depository institutions;
(xiv) Liens of a collection bank arising under Section 4-210 of the
Uniform Commercial Code on items in the course of collection; and
(xv) Liens existing as of the Closing Date and set forth on Schedule
--------
6.8; provided that no such Lien shall at any cover any time be extended to
--- --------
or cover any Property other than the Property subject thereto on the
Closing Date;
(xvi) Liens arising from or in connection with any consignment of
goods as such term is used under the Uniform Commercial Code;
(xvii) Extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of Liens referred to in the
foregoing clauses; provided that the Lien given in connection any such
--------
extension, renewal or replacement shall be limited to the property securing
the Lien prior to extension, renewal or replacement and where such Lien
secures Funded Debt, the Lien given in connection with such extension,
renewal or replacement shall not secure
23
indebtedness in an amount excess of the principal amount secured
immediately prior to the extension, renewal or replacement; or
(xviii) Liens comprised of any exclusion or exception under any title
insurance policy provided to the Administrative Agent in accordance with
the Credit Documents (which policy shall be form and content reasonably
satisfactory to the Administrative Agent).
"Person" means any individual, partnership, joint venture, firm,
------
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any Governmental Authority.
"Plan" means any employee benefit plan (as defined in Section 3(3) of
----
ERISA) which is covered by ERISA and with respect to which any member of
the Consolidated Group or any ERISA Affiliate is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA be deemed to be)
an "employer" within the meaning of Section 3(5) of ERISA.
"Pledge Agreement" means the Pledge Agreement dated as of the Closing
----------------
Date or any other pledge agreement given by the Parent, the Borrower and
the other pledgors identified therein to Bank of America, N.A., as
collateral agent, to secure the Loans and obligations owing hereunder and
under the other Credit Documents, as such pledge agreement may be amended
and modified from time to time.
"Prime Rate" means the rate of interest per annum publicly announced
----------
from time to time by Bank of America as its prime rate in effect at its
principal office in Charlotte, North Carolina, with each change in the
Prime Rate being effective on the date such change is publicly announced as
effective (it being understood and agreed that the Prime Rate is a
reference rate used by Bank of America in determining interest rates on
certain loans and is not intended to be the lowest rate of interest charged
on any extension of credit by Bank of America to any debtor).
"Pro Forma Basis" means, for purposes of determining compliance with
---------------
the financial covenants set forth in Section 7.11 on a Pro Forma Basis
hereunder, that any transaction shall be deemed to have occurred as of the
first day of the four fiscal-quarter period ending as of the most recent
fiscal quarter end preceding the date of such transaction with respect to
which the Administrative Agent has received the Required Financial
Information. As used herein, "transaction" shall mean any Asset Disposition
-----------
as referred to in Section 8.5. In connection with any calculation of the
financial covenants set forth in Section 7.11 upon giving effect to a
transaction on a Pro Forma Basis (1) income statement items (whether
positive or negative) attributable to the Property disposed of in such
Asset Disposition shall be excluded and (2) any Indebtedness which is
retired in connection with such Asset Disposition shall be excluded and
deemed to have been retired as of the first day of the applicable period.
24
"Pro Forma Compliance Certificate" means a certificate of an Executive
--------------------------------
Officer of the Borrower delivered to the Administrative Agent in connection
with any Asset Disposition referred to in Section 8.5 and containing
reasonably detailed calculations, upon giving effect to the applicable
transaction on a Pro Forma Basis, of the Combined Leverage Ratio and the
Consolidated Fixed Charge Coverage Ratio as of the most recent fiscal
quarter end preceding the date of the applicable transaction with respect
to which the Administrative Agent shall have received the Required
Financial Information.
"Property" means any interest in any kind of property or asset, whether
--------
real, personal or mixed, or tangible or intangible.
"Quoted Rate" means, with respect to a Quoted Rate Swingline Loan, the
-----------
fixed or floating percentage rate per annum, if any, offered by the
Swingline Lender and accepted by the Borrower in accordance with the
provisions hereof.
"Quoted Rate Swingline Loan" means a Swingline Loan bearing interest at
--------------------------
the Quoted Rate.
"Rate Determination Date" shall have the meaning assigned to such term
-----------------------
in the definition of "Applicable Percentage".
"Register" shall have the meaning assigned to such term in Section
--------
11.3(c).
"Regulation T, U, X or Z" means Regulation T, U, X or Z, respectively,
-----------------------
of the Board of Governors of the Federal Reserve System as from time to
time in effect and any successor to all or a portion thereof.
"Reportable Event" means any of the events set forth in Section 4043(c)
----------------
of ERISA, other than those events as to which the advance or thirty (30)
day notice requirement has been waived by regulation.
"Required Financial Information" means the annual and quarterly
------------------------------
compliance certificates and related financial statements and information
required by the provisions of Sections 7.1(a), (b) and (c), as referenced
in the definition of "Applicable Percentage".
"Required Lenders" means, at any time, Lenders having more than fifty
----------------
percent (50%) of the aggregate Commitments, or if the Commitments have been
terminated, Lenders having more than fifty percent (50%) of the aggregate
principal amount of the Obligations outstanding (taking into account in
each case Participation Interests or obligation to participate therein);
provided that the Commitments of, and outstanding principal amount of
--------
Obligations (taking into account Participation Interests therein) owing to,
a Defaulting Lender shall be excluded for purposes hereof in making a
determination of Required Lenders.
25
"Requirement of Law" means, as to any Person, the certificate of
------------------
incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule, regulation or ordinance (including,
without limitation, Environmental Laws) or determination of an arbitrator
or a court or other Governmental Authority, in each case applicable to or
binding upon such Person or to which any of its material Property is
subject.
"Restricted Payment" means (i) any dividend or other payment or
------------------
distribution, direct or indirect, on account of any shares of any class of
Capital Stock of any member of the Consolidated Group, now or hereafter
outstanding (including without limitation any payment in connection with
any dissolution, merger, consolidation or disposition involving any member
of the Consolidated Group), or to the holders, in their capacity as such,
of any shares of any class of Capital Stock of any member of the
Consolidated Group, now or hereafter outstanding (other than dividends or
distributions payable in the same class of Capital Stock of the applicable
Person or dividends or distributions payable to any Credit Party (directly
or indirectly through Subsidiaries other than to ▇▇▇▇▇▇▇▇'▇ or members of
the ▇▇▇▇▇▇▇▇'▇ Consolidated Group)), (ii) any redemption, retirement,
sinking fund or similar payment, purchase or other acquisition for value,
direct or indirect, of any shares of any class of Capital Stock of any
member of the Consolidated Group, now or hereafter outstanding, and (iii)
any payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of Capital
Stock of any member of the Consolidated Group, now or hereafter
outstanding.
"Revolving Commitment" means the commitment of each Lender to make its
--------------------
ratable share of Revolving Loans hereunder.
"Revolving Committed Amount" means, individually, the maximum Revolving
--------------------------
Commitment of each Lender, and collectively, the aggregate maximum amount
of all the Revolving Commitments of the Lenders hereunder. The initial
Revolving Committed Amounts on the Closing Date are set out in Schedule
--------
2.1.
---
"Revolving Commitment Percentage" means, for each Lender, a fraction
-------------------------------
(expressed as a percentage) the numerator of which is the Revolving
Committed Amount of such Lender at such time and the denominator of which
is the Aggregate Revolving Committed Amount at such time. The initial
Revolving Commitment Percentages are set out on Schedule 2.1.
------------
"Revolving Loans" shall have the meaning assigned to such term in
---------------
Section 2.1(a).
"Revolving Note" or "Revolving Notes" means the promissory notes of the
-------------- ---------------
Borrower in favor of each of the Lenders evidencing the Revolving Loans and
Swingline Loans in substantially the form attached as Schedule 2.5,
------------
individually or
26
collectively, as appropriate, as such promissory notes may be amended,
modified, supplemented, extended, renewed or replaced from time to time.
"S&P" means Standard & Poor's Ratings Group, a division of The McGraw
---
Hill Companies, Inc., or any successor or assignee of the business of such
division in the business of rating securities.
"Sale and Leaseback Transaction" means any arrangement pursuant to
------------------------------
which any member of the Consolidated Group, directly or indirectly, becomes
liable as lessee, guarantor or other surety with respect to any lease,
whether an Operating Lease or a Capital Lease, of any Property (a) which
such member of the Consolidated Group has sold or transferred (or is to
sell or transfer) to a Person which is not a member of the Consolidated
Group or (b) which such member of the Consolidated Group intends to use for
substantially the same purpose as any other Property which has been sold or
transferred (or is to be sold or transferred) by such member of the
Consolidated Group to another Person which is not a member of the
Consolidated Group in connection with such lease.
"Securities Exchange Act" means the Securities Exchange Act of 1934.
-----------------------
"Securitization Transaction" means any financing transaction or series
--------------------------
of financing transactions that have been or may be entered into by a member
of the Consolidated Group pursuant to which such member of the Consolidated
Group may sell, convey or otherwise transfer to (i) a Subsidiary or
affiliate (a "Securitization Subsidiary"), or (ii) any other Person, or may
-------------------------
grant a security interest in, any accounts receivable, notes receivable,
rights to future lease payments or residuals or other similar rights to
payment (the "Securitization Receivables") (whether such Securitization
--------------------------
Receivables are then existing or arising in the future) of such member of
the Consolidated Group, and any assets related thereto, including without
limitation, all security interests in merchandise or services financed
thereby, the proceeds of such Securitization Receivables, and other assets
which are customarily sold or in respect of which security interests are
customarily granted in connection with securitization transactions
involving such assets.
"Security Agreement" means the Security Agreement dated as of the
------------------
Closing Date given by the Borrower and the subsidiaries and affiliates
identified therein to Bank of America, N.A., as collateral agent, to secure
the loans and obligations owing hereunder and under the other Credit
Documents, as such Security Agreement may be amended and modified from time
to time.
"Single Employer Plan" means any Plan which is covered by Title IV of
--------------------
ERISA, but which is not a Multiemployer Plan or a Multiple Employer Plan.
"Subordinated Debt" means any Indebtedness of a member of the
-----------------
Consolidated Group which by its terms is expressly subordinated in right of
payment to the prior
27
payment of the loans and obligations under the Credit Agreement and the
other Credit Documents on the terms and conditions and evidenced by
documentation satisfactory to the Administrative Agent and the Required
Lenders.
"Subsidiary" means, as to any Person at any time, (a) any corporation
----------
more than 50% of whose Capital Stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of
such corporation (irrespective of whether or not at such time, any class or
classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at such time owned by such Person
directly or indirectly through Subsidiaries, and (b) any partnership,
association, joint venture or other entity of which such Person directly or
indirectly through Subsidiaries owns at such time more than 50% of the
Capital Stock. Unless otherwise identified, "Subsidiary" or "Subsidiaries"
shall refer to Subsidiaries of the Parent.
"Support Obligations" means, with respect to any Person, without
-------------------
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or
collection) guaranteeing or intended to guarantee any Indebtedness of any
other Person in any manner, whether direct or indirect, and including
without limitation any obligation, whether or not contingent, (i) to
purchase any such Indebtedness or any Property constituting security
therefor, (ii) to advance or provide funds or other support for the payment
or purchase of any such Indebtedness or to maintain working capital,
solvency or other balance sheet condition of such other Person (including
without limitation keep well agreements, maintenance agreements, comfort
letters or similar agreements or arrangements) for the benefit of any
holder of Indebtedness of such other Person, (iii) to lease or purchase
Property, securities or services primarily for the purpose of assuring the
holder of such Indebtedness, or (iv) to otherwise assure or hold harmless
the holder of such Indebtedness against loss in respect thereof. The
amount of any Support Obligation hereunder shall (subject to any
limitations set forth therein) be deemed to be an amount equal to the
outstanding principal amount (or maximum principal amount, if larger) of
the Indebtedness in respect of which such Support Obligation is made.
"Swingline Commitment" means the commitment of the Swingline Lender to
--------------------
make, and of the Lender to participate in, Swingline Loans hereunder.
"Swingline Committed Amount" means the maximum amount of the Swingline
--------------------------
Commitments hereunder. The initial Swingline Committed Amount on the
Closing Date is referenced in Section 2.1(c).
"Swingline Lender" means Bank of America.
----------------
"Swingline Loan" means a swingline revolving loan made by the Swingline
--------------
Lender pursuant to the provisions of Section 2.1(c).
28
"Synthetic Lease" means any synthetic lease, tax retention operating
---------------
lease, off-balance sheet loan or similar off-balance sheet financing
product where such transaction is considered borrowed money indebtedness
for tax purposes but is classified as an Operating Lease under GAAP.
"Taxes" shall have the meaning assigned to such term in Section 3.11.
-----
"Termination Date" means September 15, 2002 or such later date as to
----------------
which all of the Lenders may in their sole discretion by written consent
agree.
"Voting Stock" means, with respect to any Person, Capital Stock issued
------------
by such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right so to
vote has been suspended by the happening of such a contingency.
"Wholly Owned Subsidiary" of any Person means any Subsidiary 100% of
-----------------------
whose Voting Stock is at the time owned by such Person directly or
indirectly through other Wholly Owned Subsidiaries.
"Year 2000 Compliant" shall have the meaning assigned to such term in
-------------------
Section 6.17.
1.2 Computation of Time Periods.
---------------------------
For purposes of computation of periods of time hereunder, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding."
1.3 Accounting Terms.
----------------
Except as otherwise expressly provided herein, all accounting terms used
herein shall be interpreted, and all financial statements and certificates and
reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP applied on a consistent
basis. All calculations made for the purposes of determining compliance with
this Credit Agreement shall (except as otherwise expressly provided herein) be
made by application of GAAP applied on a basis consistent with the most recent
annual or quarterly financial statements delivered pursuant to Section 7.1 (or,
prior to the delivery of the first financial statements pursuant to Section 7.1,
consistent with the annual audited financial statements referenced in Section
6.1(i)); provided, however, if (a) the Borrower shall object to determining such
-------- -------
compliance on such basis at the time of delivery of such financial statements
due to any change in GAAP or the rules promulgated with respect thereto or (b)
the Administrative Agent or the Required Lenders shall so object in writing
within 60 days after delivery of such financial statements, then such
calculations shall be made on a basis consistent with the most recent financial
statements delivered by the Borrower and the Crescent Guarantors to the Lenders
as to which no such objection shall have been made.
29
SECTION 2
CREDIT FACILITIES
2.1 Commitments.
-----------
(a) Revolving Commitment. During the Commitment Period, subject to
--------------------
the terms and conditions hereof, each Lender severally agrees to make
revolving loans (the "Revolving Loans") to the Borrower in the amount of such
---------------
Lender's Revolving Commitment Percentage of such Revolving Loans for the
purposes hereinafter set forth; provided that (i) with regard to the Lenders
--------
collectively, the aggregate principal amount of Obligations at any time shall
not exceed the lesser of (A) ONE HUNDRED TWELVE MILLION FIVE HUNDRED THOUSAND
DOLLARS ($112,500,000) (the "Aggregate Revolving Committed Amount") or (B) the
------------------------------------
Borrowing Base, and (ii) with regard to each Lender individually, such
Lender's Revolving Commitment Percentage of Obligations at any time shall not
exceed the lesser of (A) such Lender's Revolving Committed Amount or (B) such
Lender's Revolving Commitment Percentage of the Borrowing Base; and provided
further that, notwithstanding the foregoing, the Administrative Agent may make
Revolving Loan advances in its discretion ("Discretionary Over-Advances") for
---------------------------
and on behalf of the Lenders in an aggregate principal amount not to exceed
the lesser of (A) five percent (5%) of the Borrowing Base or (B) $5 million,
and a term of not more than thirty (30) days, even though (i) a Default or
Event of Default then exists and has not been waived or cured, (ii) the other
conditions to Extensions of Credit under Section 5.2 have not or cannot be
satisfied, or (iii) after giving effect thereto, the Obligations then
outstanding will be excess of the Borrowing Base (but not in excess of the
Aggregate Revolving Committed Amount), if in the reasonable business judgment
of the Administrative Agent, such advances are necessary or advisable in the
protection or preservation of the collateral or in order to improve the
likelihood of repayment of the Obligations hereunder (including financing
working capital needs). The Administrative will give prompt notice to the
Lenders of any Discretionary Over-Advances and the circumstances giving rise
thereto, and the Lenders will promptly reimburse the Administrative Agent for
its ratable share of such advance. The right and ability of the Administrative
Agent to make Discretionary Over-Advances hereunder are subject to revocation
by written action of the Required Lenders. Revolving Loans may consist of Base
Rate Loans or Eurodollar Loans, or a combination thereof, as the Borrower may
request, and may be repaid and reborrowed in accordance with the provisions
hereof.
(b) Letter of Credit Commitment. During the Commitment Period,
---------------------------
subject to the terms and conditions hereof and of the LOC Documents, if
any, and such other terms and conditions which the Issuing Lender may
reasonably require, the Issuing Lender shall issue, and the Lenders shall
participate severally in, such standby Letters of Credit as the Borrower
may request, in form acceptable to the
30
Issuing Lender, for the purposes hereinafter set forth; provided that (i)
--------
the aggregate amount of LOC Obligations shall not exceed TEN MILLION
DOLLARS ($10,000,000) at any time (the "LOC Committed Amount"), (ii) with
--------------------
regard to the Lenders collectively, the aggregate principal amount of
Obligations at any time shall not exceed the lesser of (A) the Aggregate
Revolving Committed Amount or (B) the Borrowing Base, and (iii) with regard
to each Lender individually, such Lender's Revolving Commitment Percentage
of Obligations at any time shall not exceed the lesser of (A) such Lender's
Revolving Committed Amount or (B) such Lender's Revolving Commitment
Percentage of the Borrowing Base. Letters of Credit issued hereunder shall
have an expiry date not more than one year from the date of issuance or
extension, and may not extend beyond the Termination Date.
(c) Swingline Commitment. During the Commitment Period, subject to the
--------------------
terms and conditions hereof, the Swingline Lender agrees to make certain
revolving loans (the "Swingline Loans") to the Borrower; provided that (i)
--------------- --------
the aggregate principal amount of Swingline Loans shall not exceed FIVE
MILLION DOLLARS ($5,000,000) at any time (the "Swingline Committed
-------------------
Amount"), (ii) with regard to the Lenders collectively, the aggregate
principal amount of Obligations at any time shall not exceed the lesser of
(A) the Aggregate Revolving Committed Amount or (B) the Borrowing Base,
(iii) with regard to each Lender individually, such Lender's Revolving
Commitment Percentage of Obligations at any time shall not exceed the
lesser of (A) such Lender's Revolving Committed Amount or (B) such Lender's
Revolving Commitment Percentage of the Borrowing Base. Swingline Loans may
consist of Base Rate Loans or Quoted Rate Swingline Loans, or a combination
thereof, as the Borrower may request, and may be repaid and reborrowed in
accordance with the provisions hereof.
(d) Increase in Revolving Commitments. So long as the revolving
---------------------------------
commitments hereunder and under the ▇▇▇▇▇▇▇▇'▇ Credit Agreement shall be
not greater than $200 million in the aggregate, then subject to the terms
and conditions set forth herein, upon twelve (12) days advance written
notice to the Administrative Agent, the Borrower shall have the right, at
any time and from time to time from the Closing Date until the Termination
Date, to increase the Aggregate Revolving Committed Amount to an aggregate
available amount not to exceed $125,000,000; provided that (i) any such
--------
increase shall be in a minimum principal amount of $5,000,000 and integral
multiples of $1,000,000 in excess thereof (or the remaining amount, if
less), (ii) if any Revolving Loans are outstanding at the time of any such
increase, the Borrower shall make such payments and adjustments on the
Revolving Loans (including payment of any break-funding amount owing under
Section 3.12) as necessary to give effect to the revised Revolving
Commitment Percentages and Revolving Commitment Amounts of the Lenders
resulting from such increase and (iii) the conditions to Extensions of
Credit in Sections 5.2(a), (b) and (c) shall be satisfied as of the date of
such increase. An increase in the Aggregate Revolving Committed Amount
hereunder shall be subject to satisfaction of the following: (A) in the
case of any such request
31
for an increase in the Aggregate Revolving Committed Amount, the amount of
such increase shall be offered first to the existing Lenders, and in the
event the additional commitments which existing Lenders are willing to take
shall exceed the amount requested by the Borrower, then in proportion to
the Revolving Commitments of such existing Lenders willing to take
additional commitments, (B) in the case of any such request for an increase
in the Aggregate Revolving Committed Amount, if the amount of the
additional commitments requested by the Borrower shall exceed the
additional commitments which the existing Lenders are willing to take, then
the Borrower may invite other commercial banks and financial institutions
reasonably acceptable to the Administrative Agent to join this Credit
Agreement as Lenders hereunder for the portion of commitments not taken by
existing Lenders, provided that such other commercial banks and financial
institutions shall enter into such joinder agreements to give effect
thereto as the Administrative Agent and the Borrower may reasonably request
(C) additional commitments shall have been received and accepted by the
Administrative Agent under the ▇▇▇▇▇▇▇▇'▇ Credit Agreement from those
Lenders which have increased their commitments under this Agreement
pursuant to this subsection, such that after giving effect to the increase
in commitments hereunder and thereunder, each such Lender shall have the
same commitment percentage hereunder and thereunder, and (D) the aggregate
commitments hereunder and under the ▇▇▇▇▇▇▇▇'▇ Credit Agreement shall be
increased to maintain their same relative commitments (e.g., 62.5% and
37.5%, respectively), subject to adjustments for rounding in the
Administrative Agent's discretion. In connection with any increase in the
Aggregate Revolving Committed Amount pursuant to this Section, Schedule
--------
2.1(a) shall be revised to reflect the modified Revolving Commitment
------
Percentages and Commitments of the Lenders.
32
2.2 Method of Borrowing.
-------------------
(a) Notice of Request for Extensions of Credit. The Borrower shall
------------------------------------------
request an Extension of Credit hereunder by written notice (or telephone
notice promptly confirmed in writing) as follows:
(i) Revolving Loans. In the case of Revolving Loans, to the
---------------
Administrative Agent not later than 10:00 A.M. (Dallas, Texas time) on
the Business Day of the requested borrowing in the case of Base Rate
Loans, and on the third Business Day prior to the date of the
requested borrowing in the case of Eurodollar Loans. Each such
request for borrowing shall be irrevocable and shall specify (A) that
a Revolving Loan is requested, (B) the date of the requested borrowing
(which shall be a Business Day), (C) the aggregate principal amount to
be borrowed, and (D) whether the borrowing shall be comprised of Base
Rate Loans, Eurodollar Loans or a combination thereof, and if
Eurodollar Loans are requested, the Interest Period(s) therefor. A
form of Notice of Borrowing is attached as Schedule 2.2(a)(i). The
-----------------
Administrative Agent shall give notice to each Lender promptly upon
receipt of each Notice of Borrowing pursuant to this Section
2.2(a)(i), the contents thereof and each such Lender's share of any
borrowing to be made pursuant thereto.
(ii) Letters of Credit. In the case of Letters of Credit, to
-----------------
the Issuing Lender with a copy to the Administrative Agent not later
than 10:00 A.M. (Dallas, Texas time) on the third Business Day prior
to the date of the requested issuance or extension (or such shorter
period as may be agreed by the Issuing Lender). Each such request for
issuance or extension of a Letter of Credit shall be irrevocable and
shall specify, among other things, (A) that a Letter of Credit is
requested, (B) the date of the requested issuance or extension, (C)
the type, amount, expiry date and terms on which the Letter of Credit
is to be issued or extended, and (D) the beneficiary. A form of Notice
of Request for Letter of Credit is attached as Schedule 2.2(a)(ii).
-------------------
The Issuing Lender shall notify the Lenders of the issuance of any
Letter of Credit.
(iii) Swingline Loans. In the case of Swingline Loans, to the
---------------
Swingline Lender not later than 10:00 A.M. (Dallas, Texas time) on the
Business Day of the requested borrowing. Each such request for
borrowing shall be irrevocable and shall specify (A) that a Swingline
Loan is requested, (B) the date of the requested borrowing (which
shall be a Business Day), (C) the aggregate principal amount to be
borrowed, and (D) the interest rate option and maturity requested
therefor. A form of Notice of Borrowing is attached as Schedule
--------
2.2(a)(i). Each Swingline Loan shall have a maturity date as the
---------
Borrower may request and the Swingline Lender may agree.
Notwithstanding the foregoing provisions of this subsection (iii), the
Borrower and the Swingline Lender may from time to time agree to make
Swingline Loan
33
advances pursuant to an "auto-borrow" and "zero-balance" or other
similar arrangement, subject however to the conditions and limitations
relating to the Swingline Loans set out herein.
(b) Minimum Amounts. Each Revolving Loan borrowing (including
---------------
extensions and conversions) shall be in a minimum principal amount of
$2,500,000 and integral multiples of $500,000 in excess thereof, in the
case of Eurodollar Loans, or $500,000 (or the remaining Committed Amount,
if less) and integral multiples of $100,000 in excess thereof, in the case
of Base Rate Loans. Each Swingline Loan advance shall be in a minimum
principal amount of $50,000; provided that in the event that an agreement
--------
providing for an "auto-borrow" and "zero-balance" or other similar
arrangement shall then be in place with the Swingline Lender, Swingline
Loan advances shall be in such principal minimum amounts, if any, provided
by such agreement.
(c) Information Not Provided. If in connection with any such request
------------------------
for a Loan, the Borrower shall fail to specify (i) an applicable Interest
Period in the case of a Eurodollar Loan, the Borrower shall be deemed to
have requested an Interest Period of one month, or (ii) the type of loan
requested in the case of Revolving Loans or Swingline Loans, the Borrower
shall be deemed to have requested a Base Rate Loan.
(d) Maximum Number of Eurodollar Loans. No more than twelve (12)
----------------------------------
borrowings of Eurodollar Loans shall be outstanding at any time. For
purposes hereof, Eurodollar Loans with separate or different Interest
Periods will be considered as separate Eurodollar Loans even if their
Interest Periods expire on the same date.
2.3 Interest.
--------
Subject to Section 3.1, the Loans hereunder shall bear interest at a per
annum rate, payable in arrears on each applicable Interest Payment Date (or at
such other times as may be specified herein), as follows:
(a) Base Rate Loans. During such periods as the Loans shall be
---------------
comprised of Base Rate Loans, the Adjusted Base Rate;
(b) Eurodollar Loans. During such periods as the Loans shall be
----------------
comprised of Eurodollar Loans, the Adjusted Eurodollar Rate; and
(c) Quoted Rate Swingline Loans. During such periods as the Swingline
---------------------------
Loans shall be comprised of Quoted Rate Swingline Loans, the Quoted Rate.
34
2.4 Repayment.
---------
(a) Revolving Loans. The principal amount of all Revolving Loans shall
---------------
be due and payable in full on the Termination Date.
(b) Swingline Loans. The principal amount of all Swingline Loans shall
---------------
be due and payable on the earlier of (A) the maturity date agreed to by the
Swingline Lender and the Borrower with respect to such Loan, or (B) the
Termination Date.
2.5 Notes.
-----
The Revolving Loans and Swingline Loans shall be evidenced by the Revolving
Notes.
2.6 Additional Provisions relating to Letters of Credit.
---------------------------------------------------
(a) Reports. The Issuing Lender will provide to the Administrative
-------
Agent at least monthly, and more frequently upon request, a detailed
summary report on its Letters of Credit and the activity thereon, in form
and substance acceptable to the Administrative Agent. In addition, the
Issuing Lender will provide to the Administrative Agent for dissemination
to the Lenders and the Borrower at least quarterly, and more frequently
upon request, a detailed summary report on its Letters of Credit and the
activity thereon, including, among other things, the Credit Party for whose
account the Letter of Credit is issued, the beneficiary, the face amount,
and the expiry date. The Issuing Lender will provide (i) the proposed form
of Letter of Credit to the Borrower prior to its issuance promptly upon
request, and (ii) copies of the Letters of Credit to the Administrative
Agent, the Lenders and the Borrower promptly upon request.
(b) Participation. Each Lender, with respect to the Existing Letters of
-------------
Credit, hereby purchases a participation interest in such Existing Letters
of Credit, and with respect to Letters of Credit issued on or after the
Closing Date, upon issuance of a Letter of Credit, shall be deemed to have
purchased without recourse a risk participation from the Issuing Lender in
such Letter of Credit and the obligations arising thereunder, in each case
in an amount equal to its pro rata share of the obligations under such
Letter of Credit (based on the respective Revolving Commitment Percentages
of the Lenders) and shall absolutely, unconditionally and irrevocably
assume, as primary obligor and not as surety, and be obligated to pay to
the Issuing Lender therefor and discharge when due, its pro rata share of
the obligations arising under such Letter of Credit. Without limiting the
scope and nature of each Lender's participation in any Letter of Credit, to
the extent that the Issuing Lender has not been reimbursed as required
hereunder or under any such Letter of Credit, each Lender shall pay to the
Issuing Lender its pro rata share of such unreimbursed drawing in same day
funds pursuant to the provisions of subsection (c) hereof. The obligation
of each Lender to so reimburse the Issuing Lender shall be absolute and
unconditional and shall not be affected by the occurrence of a Default, an
Event of Default or any
35
other occurrence or event. Any such reimbursement shall not relieve or
otherwise impair the obligation of the Borrower to reimburse the Issuing
Lender under any Letter of Credit, together with interest as hereinafter
provided.
(c) Reimbursement. In the event of any drawing under any Letter of
-------------
Credit, the Issuing Lender will promptly notify the Borrower. Unless the
Borrower shall immediately notify the Issuing Lender that the Borrower
intends to otherwise reimburse the Issuing Lender for such drawing, the
Borrower shall be deemed to have requested that the Lenders make a
Revolving Loan in the amount of the drawing as provided in subsection (d)
hereof on the related Letter of Credit, the proceeds of which will be used
to satisfy the related reimbursement obligations. The Borrower promises to
reimburse the Issuing Lender on the day of drawing under any Letter of
Credit (either with the proceeds of a Revolving Loan obtained hereunder or
otherwise) in same day funds. If the Borrower shall fail to reimburse the
Issuing Lender as provided hereinabove, the unreimbursed amount of such
drawing shall bear interest at a per annum rate equal to the Adjusted Base
Rate plus two percent (2%). The Borrower's reimbursement obligations
hereunder shall be absolute and unconditional under all circumstances
irrespective of any rights of setoff, counterclaim or defense to payment
the Borrower may claim or have against the Issuing Lender, the
Administrative Agent, the Lenders, the beneficiary of the Letter of Credit
drawn upon or any other Person, including without limitation any defense
based on any failure of the Borrower or any Crescent Guarantor to receive
consideration or the legality, validity, regularity or unenforceability of
the Letter of Credit. The Issuing Lender will promptly notify the other
Lenders of the amount of any unreimbursed drawing and each Lender shall
promptly pay to the Administrative Agent for the account of the Issuing
Lender in Dollars and in immediately available funds, the amount of such
Lender's Revolving Commitment Percentage of such unreimbursed drawing. Such
payment shall be made on the day such notice is received by such Lender
from the Issuing Lender if such notice is received at or before 2:00 P.M.
(Dallas, Texas time) otherwise such payment shall be made at or before
12:00 Noon (Dallas, Texas time) on the Business Day next succeeding the day
such notice is received. If such Lender does not pay such amount to the
Issuing Lender in full upon such request, such Lender shall, on demand, pay
to the Administrative Agent for the account of the Issuing Lender interest
on the unpaid amount during the period from the date of such drawing until
such Lender pays such amount to the Issuing Lender in full at a rate per
annum equal to, if paid within two (2) Business Days of the date that such
Lender is required to make payments of such amount pursuant to the
preceding sentence, the Federal Funds Rate and thereafter at a rate equal
to the Base Rate. Each Lender's obligation to make such payment to the
Issuing Lender, and the right of the Issuing Lender to receive the same,
shall be absolute and unconditional, shall not be affected by any
circumstance whatsoever and without regard to the termination of this
Credit Agreement or the Commitments hereunder, the existence of a Default
or Event of Default or the acceleration of the obligations of the Borrower
hereunder and shall be made without any offset, abatement, withholding or
reduction whatsoever. Simultaneously with the making of each such payment
by a Lender to the Issuing Lender, such Lender shall, automatically and
without any further action on the part of the Issuing Lender or such
Lender,
36
acquire a participation in an amount equal to such payment (excluding the
portion of such payment constituting interest owing to the Issuing Lender)
in the related unreimbursed drawing portion of the LOC Obligation and in
the interest thereon and in the related LOC Documents, and shall have a
claim against the Borrower with respect thereto.
(d) Repayment with Revolving Loans. On any day on which the Borrower
------------------------------
shall have requested, or been deemed to have requested, a Revolving Loan
advance to reimburse a drawing under a Letter of Credit, the Administrative
Agent shall give notice to the Lenders that a Revolving Loan has been
requested or deemed requested by the Borrower to be made in connection with
a drawing under a Letter of Credit, in which case a Revolving Loan advance
comprised of Base Rate Loans (or Eurodollar Loans to the extent the
Borrower has complied with the procedures of Section 2.2(a)(i) with respect
thereto) shall be immediately made to the Borrower by all Lenders
(notwithstanding any termination of the Commitments pursuant to Section
9.2) pro rata based on the respective Revolving Commitment Percentages of
--- ----
the Lenders (determined before giving effect to any termination of the
Commitments pursuant to Section 9.2) and the proceeds thereof shall be paid
directly to the Issuing Lender for application to the respective LOC
Obligations. Each such Lender hereby irrevocably agrees to make its pro
rata share of each such Revolving Loan advance immediately upon any such
request or deemed request in the amount, in the manner and on the date
specified in the preceding sentence notwithstanding (i) the amount of such
---------------
borrowing may not comply with the minimum amount for advances of Revolving
Loans otherwise required hereunder, (ii) whether any conditions specified
in Section 5.2 are then satisfied, (iii) whether a Default or an Event of
Default then exists, (iv) failure for any such request or deemed request
for Revolving Loan to be made by the time otherwise required hereunder, (v)
whether the date of such borrowing is a date on which Revolving Loans are
otherwise permitted to be made hereunder or (vi) any termination of the
Commitments relating thereto immediately prior to or contemporaneously with
such borrowing. In the event that any Revolving Loan advance cannot for any
reason be so made on the date otherwise required above (including, without
limitation, as a result of the commencement of a proceeding under the
Bankruptcy Code with respect to the Borrower or any Crescent Guarantor),
then each such Lender hereby agrees that it shall forthwith fund its
purchase (as of the date such borrowing would otherwise have occurred, but
adjusted for any payments received from the Borrower on or after such date
and prior to such purchase) from the Issuing Lender such Participation
Interest in the outstanding LOC Obligations as shall be necessary to cause
each such Lender to share in such LOC Obligations ratably (based upon the
respective Commitment Percentages of the Lenders (determined before giving
effect to any termination of the Commitments pursuant to Section 9.2)),
provided that in the event such payment is not made when required by
--------
subsection (c), such Lender shall pay in addition to the Issuing Lender
interest on the amount of its unfunded Participation Interest at a rate
equal to, if paid within two (2) Business Days of the date of drawing, the
Federal Funds Rate, and thereafter at the Base Rate.
37
(e) Designation of other Credit Parties as Account Parties.
------------------------------------------------------
Notwithstanding anything to the contrary set forth in this Credit
Agreement, including without limitation Section 2.2(a)(ii) hereof, a Letter
of Credit issued hereunder may contain a statement to the effect that such
Letter of Credit is issued for the account of a Crescent Guarantor,
provided that notwithstanding such statement, the Borrower shall be the
actual account party for all purposes of this Credit Agreement for such
Letter of Credit and such statement shall not affect the Borrower's
reimbursement obligations hereunder with respect to such Letter of Credit.
(f) Renewal, Extension. The renewal or extension of any Letter of
------------------
Credit shall, for purposes hereof, be treated in all respects the same as
the issuance of a new Letter of Credit hereunder.
(g) Uniform Customs and Practices. The Issuing Lender may have the
-----------------------------
Letters of Credit be subject to The Uniform Customs and Practice for
Documentary Credits (the "UCP") or the International Standby Practices 1998
(the "ISP98"), in either case as published as of the date of issue by the
International Chamber of Commerce, in which case the UCP or the ISP98, as
applicable, may be incorporated therein and deemed in all respects to be a
part thereof.
(h) Indemnification; Nature of Issuing Lender's Duties.
--------------------------------------------------
(i) In addition to its other obligations under this Section 2.6,
the Borrower hereby agrees to protect, indemnify, pay and save the
Issuing Lender and the Lenders harmless from and against any and all
claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable attorneys' fees) that the Issuing
Lender or any Lender may incur or be subject to as a consequence,
direct or indirect, of (A) the issuance of any Letter of Credit or (B)
the failure of the Issuing Lender to honor a drawing under a Letter of
Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government or
governmental authority (all such acts or omissions, herein called
"Government Acts").
---------------
(ii) As between the Borrower on the one hand and the Issuing Lender
and the Lenders on the other hand, the Borrower shall assume all risks
of the acts, omissions or misuse of any Letter of Credit by the
beneficiary thereof. The Issuing Lender and the Lenders shall not be
responsible: (A) for the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in
connection with the application for and issuance of any Letter of
Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (B) for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, that may
prove to be invalid or ineffective for any reason; (C) for errors,
omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise,
38
whether or not they be in cipher unless such errors, omissions,
interruptions or delays are the result of the gross negligence or
willful misconduct of the Issuing Lender; (D) for any loss or delay in
the transmission or otherwise of any document required in order to
make a drawing under a Letter of Credit or of the proceeds thereof
unless such loss or delay is the result of the gross negligence or
willful misconduct of the Issuing Lender; and (E) for any consequences
arising from causes beyond the control of the Issuing Lender,
including, without limitation, any Government Acts. None of the above
shall affect, impair, or prevent the vesting of the Issuing Lender's
rights or powers hereunder.
(iii) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted
by the Issuing Lender, under or in connection with any Letter of
Credit or the related certificates, if taken or omitted in good faith,
shall not put such Issuing Lender under any resulting liability to the
Borrower or any Crescent Guarantor. It is the intention of the
parties that this Credit Agreement shall be construed and applied to
protect and indemnify the Issuing Lender and the Lenders against any
and all risks involved in the issuance of the Letters of Credit, all
of which risks are hereby assumed by the Borrower (on behalf of itself
and each of the Crescent Guarantors), including, without limitation,
any and all Government Acts. The Issuing Lender and the Lenders shall
not, in any way, be liable for any failure by the Issuing Lender or
anyone else to pay any drawing under any Letter of Credit as a result
of any Government Acts or any other cause beyond the control of the
Issuing Lender or the Lenders, as the case may be.
(iv) Nothing in this subsection (h) is intended to limit the
reimbursement obligations of the Borrower contained in subsection (d)
above. The obligations of the Borrower under this subsection (h) shall
survive the termination of this Credit Agreement. No act or omissions
of any current or prior beneficiary of a Letter of Credit shall in any
way affect or impair the rights of the Issuing Lender to enforce any
right, power or benefit under this Credit Agreement.
(v) Notwithstanding anything to the contrary contained in this
subsection (h), the Borrower shall have no obligation to indemnify the
Issuing Lender in respect of any liability incurred by the Issuing
Lender (A) to the extent arising out of the gross negligence or
willful misconduct of the Issuing Lender, as determined by a court of
competent jurisdiction, or (B) caused by the Issuing Lender's failure
to pay under any Letter of Credit after presentation to it of a
request strictly complying with the terms and conditions of such
Letter of Credit, as determined by a court of competent jurisdiction,
unless such payment is prohibited by any law, regulation, court order
or decree.
(i) Responsibility of Issuing Lender. It is expressly understood and
--------------------------------
agreed that the obligations of the Issuing Lender hereunder to the Lenders
are only those
39
expressly set forth in this Credit Agreement and that the Issuing Lender
shall be entitled to assume that the conditions precedent set forth in
Section 5.2 have been satisfied unless it shall have acquired actual
knowledge that any such condition precedent has not been satisfied;
provided, however, that nothing set forth in this Section 2.6 shall be
deemed to prejudice the right of any Lender to recover from the Issuing
Lender any amounts made available by such Lender to the Issuing Lender
pursuant to this Section 2.6 in the event that it is determined by a court
of competent jurisdiction that the payment with respect to a Letter of
Credit constituted gross negligence or willful misconduct on the part of
the Issuing Lender.
(j) Conflict with LOC Documents. In the event of any conflict between
---------------------------
this Credit Agreement and any LOC Document (including any letter of credit
application), this Credit Agreement shall control.
2.7 Additional Provisions relating to Swingline Loans.
-------------------------------------------------
The Swingline Lender may, at any time, in its sole discretion, by written
notice to the Borrower and the Lenders, demand repayment of its Swingline Loans
by way of a Revolving Loan advance, in which case the Borrower shall be deemed
to have requested a Revolving Loan advance comprised solely of Base Rate Loans
in the amount of such Swingline Loans; provided, however, that any such demand
-------- -------
shall be deemed to have been given one Business Day prior to the Termination
Date and on the date of the occurrence of any Event of Default described in
Section 9.1 and upon acceleration of the indebtedness hereunder and the exercise
of remedies in accordance with the provisions of Section 9.2. Each Lender
hereby irrevocably agrees to make its Revolving Commitment Percentage of each
such Revolving Loan advance in the amount, in the manner and on the date
specified in the preceding sentence notwithstanding (i) the amount of such
---------------
borrowing may not comply with the minimum amount for advances of Revolving Loans
otherwise required hereunder, (ii) whether any conditions specified in Section
5.2 are then satisfied, (iii) whether a Default or an Event of Default then
exists, (iv) failure of any such request or deemed request for Revolving Loan to
be made by the time otherwise required hereunder, (v) whether the date of such
borrowing is a date on which Revolving Loans are otherwise permitted to be made
hereunder or (vi) any termination of the Commitments relating thereto
immediately prior to or contemporaneously with such borrowing. In the event
that any Revolving Loan advance cannot for any reason be so made on the date
otherwise required above (including, without limitation, as a result of the
commencement of a proceeding under the Bankruptcy Code with respect to the
Borrower or any Crescent Guarantor), then each Lender hereby agrees that it
shall forthwith purchase (as of the date such borrowing would otherwise have
occurred, but adjusted for any payments received from the Borrower on or after
such date and prior to such purchase) from the Swingline Lender such
Participation Interests in the outstanding Swingline Loans as shall be necessary
to cause each such Lender to share in such Swingline Loans ratably based upon
its Revolving Commitment Percentage of the Revolving Committed Amount
(determined before giving effect to any termination of the Commitments pursuant
to Section 3.4), provided that (A) all interest payable on the Swingline Loans
--------
shall be for the account of the Swingline Lender until the date as of which the
respective Participation Interest is funded and (B) at the time any purchase of
Participation Interests pursuant to this sentence is actually made, the
purchasing
40
Lender shall be required to pay to the Swingline Lender, to the extent not paid
to the Swingline Lender by the Borrower in accordance with the terms of Section
2.4(b), interest on the principal amount of Participation Interests purchased
for each day from and including the day upon which such borrowing would
otherwise have occurred to but excluding the date of payment for such
Participation Interests, at the rate equal to the Federal Funds Rate.
SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
----------------------------------------------
3.1 Default Rate.
------------
Upon the occurrence, and during the continuance, of an Event of Default,
(i) the principal of and, to the extent permitted by law, interest on the Loans
and any other amounts owing hereunder or under the other Credit Documents shall
bear interest, payable on demand, at a per annum rate 2% greater than the rate
which would otherwise be applicable (or if no rate is applicable, whether in
respect of interest, fees or other amounts, then the Adjusted Base Rate plus 2%)
----
and (ii) the Letter of Credit Fee shall accrue at a per annum rate 2% greater
than the rate which would otherwise be applicable.
3.2 Extension and Conversion.
------------------------
The Borrower shall have the option, on any Business Day, to extend existing
Loans into a subsequent permissible Interest Period or to convert Loans into
Loans of another interest rate type; provided, however, that (i) except as
-------- -------
provided in Section 3.8, Eurodollar Loans may be converted into Base Rate Loans
or extended as Eurodollar Loans for new Interest Periods only on the last day of
the Interest Period applicable thereto, (ii) without the consent of the Required
Lenders, Eurodollar Loans may be extended, and Base Rate Loans may be converted
into Eurodollar Loans, only if the conditions precedent set forth in Section 5.2
are satisfied on the date of Continuation or Conversion, (iii) Loans extended
as, or converted into, Eurodollar Loans shall be subject to the terms of the
definition of "Interest Period" and shall be in such minimum amounts as provided
---------------
in Section 2.2(b), (iv) no more than twelve (12) borrowings of Eurodollar Loans
shall be outstanding hereunder at any time (it being understood that, for
purposes hereof, Eurodollar Loans with different Interest Periods shall be
considered as separate Eurodollar Loans, even if they begin on the same date,
although borrowings, Continuations and Conversions may, in accordance with the
provisions hereof, be combined at the end of existing Interest Periods to
constitute a new Eurodollar Loan with a single Interest Period) and (v) any
request for Continuation or Conversion of a Eurodollar Loan which shall fail to
specify an Interest Period shall be deemed to be a request for an Interest
Period of one month. Each such Continuation or Conversion shall be effected by
the Borrower by giving a Notice of Extension/Conversion (or telephonic notice
promptly confirmed in writing) to the office of the Administrative Agent
specified in Section 11.1, or at such other office as the Administrative Agent
may designate in writing, prior to 10:00 A.M. (Dallas, Texas time) on the
Business Day of, in the case of the Conversion of a Eurodollar Loan into a Base
Rate Loan, and on the third Business Day prior to, in the case of the
Continuation of a Eurodollar Loan as,
41
or Conversion of a Base Rate Loan into, a Eurodollar Loan, the date of the
proposed Continuation or Conversion, specifying the date of the proposed
Continuation or Conversion, the Loans to be so extended or converted, the types
of Loans into which such Loans are to be converted and, if appropriate, the
applicable Interest Periods with respect thereto. Each request for Continuation
or Conversion shall be irrevocable and shall constitute a representation and
warranty by the Borrower of the matters specified in subsections (a) and (b) of
Section 5.2. In the event the Borrower fails to request Continuation or
Conversion of any Eurodollar Loan in accordance with this Section, or any such
Conversion or Continuation is not permitted or required by this Section, then
such Eurodollar Loan shall be automatically continued as a Eurodollar Loan with
an Interest Period of one month at the end of the Interest Period applicable
thereto. The Administrative Agent shall give each Lender notice as promptly as
practicable of any such proposed Continuation or Conversion affecting any Loan.
3.3 Prepayments.
-----------
(a) Voluntary Prepayments. The Loans may be repaid in whole or in part
---------------------
without premium or penalty; provided that (i) Eurodollar Loans may be
--------
prepaid only upon three (3) Business Days' prior written notice to the
Administrative Agent and must be accompanied by payment of any amounts
owing under Section 3.12, (ii) such notice shall be provided by 11:00 A.M.,
Dallas, Texas time on the date of such prepayment, in the case of Base Rate
Loans, or on the date three Business Days' prior to such prepayment, in the
case of Eurodollar Loans, and (iii) partial prepayments shall be minimum
principal amounts of $2,500,000 and integral multiples of $500,000 in
excess thereof, in the case of Eurodollar Loans, and $500,000 and integral
multiples of $100,000 in excess thereof, in the case of Base Rate Loans;
provided that in the event that an agreement providing for an "auto-borrow"
--------
and "zero-balance" or other similar arrangement shall then be in place with
the Swingline Lender, prepayments of Swingline Loans shall be in such
minimum amounts, if any, provided by such agreement.
(b) Mandatory Prepayments.
---------------------
(i) Revolving Commitments. If at any time (i) the aggregate
---------------------
principal amount of Obligations shall exceed the lesser of (A) the
Aggregate Revolving Committed Amount, or (B) the Borrowing Base, (ii)
the aggregate amount of LOC Obligations shall exceed the LOC Committed
Amount, or (iii) the aggregate principal amount of Swingline Loans
shall exceed the Swingline Committed Amount, the Borrower shall make
payment promptly on demand on the Revolving Loans, on the Swingline
Loans and/or to a cash collateral account in respect of the LOC
Obligations, in an amount sufficient to eliminate the difference.
(ii) Asset Dispositions. To the extent that the aggregate net
------------------
proceeds received from Asset Dispositions exceed $1,000,000 during any
calendar year, the Borrower shall prepay the Obligations hereunder in
an
42
amount equal to any such net proceeds in excess over $1,000,000
upon receipt thereof. Prepayments under this clause (ii) shall not
result in a commitment reduction and amounts paid on account thereof
may be reborrowed subject to the availability and the other conditions
to Extensions of Credit hereunder.
(c) Application. Unless otherwise specified, prepayments on the
-----------
Obligations shall be applied first to Base Rate Loans and then to
Eurodollar Loans and Quoted Rate Swingline Loans in direct order of
Interest Period maturities.
3.4 Reduction and Termination of Commitments.
----------------------------------------
(a) Voluntary Reduction of Commitments. The Commitments may be
----------------------------------
terminated or permanently reduced in whole or in part upon three (3)
Business Days' prior written notice to the Administrative Agent, provided
--------
that (i) after giving effect to any voluntary reduction the aggregate
amount of Obligations shall not exceed the lesser of (A) the Aggregate
Revolving Committed Amount, as reduced, or (B) the Borrowing Base, and (ii)
partial reductions shall be in a minimum principal amount of $2,500,000 and
integral multiples of $500,000 in excess thereof. The Administrative Agent
shall promptly notify the Lenders of any such reduction.
(b) Termination of Commitments. The Commitments hereunder shall
--------------------------
terminate on the Termination Date.
3.5 Fees.
----
(a) Commitment Fee. In consideration of the Revolving Commitments
--------------
hereunder, the Borrower agrees to pay to the Administrative Agent for the
ratable benefit of the Lenders a commitment fee (the "Commitment Fee")
--------------
equal to the Applicable Percentage per annum on the average daily unused
amount of the Revolving Committed Amount for the applicable period. The
Commitment Fee shall be payable quarterly in arrears on the 15th day
following the last day of each calendar quarter for the immediately
preceding quarter (or portion thereof) beginning with the first such date
to occur after the Closing Date and on the Termination Date. For purposes
of computation of the Commitment Fee, Swingline Loans shall not be counted
toward or considered usage under the Revolving Committed Amount.
(b) Letter of Credit Fees.
---------------------
(i) Letter of Credit Issuance Fee. In consideration of the
-----------------------------
issuance of standby Letters of Credit hereunder, the Borrower promises
to pay to the Administrative Agent for the account of each Lender a
fee (the "Letter of Credit Fee") on such Lender's Revolving Commitment
--------------------
Percentage of the average daily maximum amount available to be drawn
under each such standby
43
Letter of Credit computed at a per annum rate for each day from the
date of issuance to the date of expiration equal to the Applicable
Percentage. The Letter of Credit Fee shall be payable quarterly in
arrears on the last Business Day of each March, June, September and
December for the immediately preceding quarter (or a portion thereof).
(ii) Issuing Lender Fees. In addition to the Letter of Credit Fee,
-------------------
the Borrower promises to pay to the Administrative Agent for the
account of the Issuing Lender without sharing by the other Lenders (i)
a letter of credit fronting fee of one-eighth of one percent (0.125%)
on the average daily maximum amount available to be drawn under each
Letter of Credit computed at a per annum rate for each day from the
date of issuance to the date of expiration and (ii) the customary
charges from time to time of the Issuing Lender with respect to the
issuance, amendment, transfer, administration, cancellation and
conversion of, and drawings under, such Letters of Credit.
(c) Administrative Fees. The Borrower agrees to pay to the
-------------------
Administrative Agent, for its own account, the fees referred to in the
Administrative Agent's Fee Letter (the "Administrative Agent's Fees").
---------------------------
3.6 Capital Adequacy.
----------------
If any Lender has reasonably determined that the adoption or the becoming
effective after the date hereof of, or any change in, or any change after the
date hereof by any Governmental Authority, central bank or comparable agency
charged with the interpretation or administration thereof in the interpretation
or administration of, any applicable law, rule or regulation regarding capital
adequacy, or compliance by such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on such Lender's (including, for purposes hereof, the parent
company of such Lender) capital or assets as a consequence of its commitments or
obligations hereunder to a level below that which such Lender could have
achieved but for such adoption, effectiveness, change or compliance (taking into
consideration such Lender's policies with respect to capital adequacy), then,
upon notice from such Lender to the Borrower, the Borrower shall be obligated to
pay to such Lender such additional amount or amounts as will compensate such
Lender for such reduction. Each determination by any such Lender of amounts
owing under this Section shall, absent manifest error, be conclusive and binding
on the parties hereto.
If the Borrower or any Crescent Guarantor is required to pay additional
amount to or for the account of any Lender pursuant to this Section 3.6, then
such Lender will agree to use reasonable efforts to change the jurisdiction of
its Applicable Lending Office so as to eliminate or reduce any such additional
payment which may thereafter accrue if such change, in the judgment of such
Lender, is not otherwise disadvantageous to such Lender.
44
3.7 Limitation on Eurodollar Loans.
------------------------------
If on or prior to the first day of any Interest Period for any Eurodollar
Loan:
(a) the Administrative Agent reasonably determines (which determination
shall be conclusive) that by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period; or
(b) the Required Lenders reasonably determine (which determination
shall be conclusive) and notify the Administrative Agent that the
Eurodollar Rate will not adequately and fairly reflect the cost to the
Lenders of funding Eurodollar Loans for such Interest Period;
then the Administrative Agent shall give the Borrower prompt notice thereof, and
so long as such condition remains in effect, the Lenders shall be under no
obligation to make additional Eurodollar Loans, Continue Eurodollar Loans, or to
Convert Base Rate Loans into Eurodollar Loans.
3.8 Illegality.
----------
Notwithstanding any other provision of this Credit Agreement, in the event
that it becomes unlawful for any Lender (or its Applicable Lending Office) to
make, maintain, or fund Eurodollar Loans hereunder, then such Lender shall
promptly notify the Borrower thereof and such Lender's obligation to make or
Continue Eurodollar Loans and to Convert Base Rate Loans into Eurodollar Loans
shall be suspended until such time as such Lender may again make, maintain, and
fund Eurodollar Loans (in which case the provisions of Section 3.10 shall be
applicable).
3.9 Requirements of Law.
-------------------
If, after the date hereof, the adoption of any applicable law, rule, or
regulation, or any change in any applicable law, rule, or regulation, or any
change in the interpretation or administration thereof by any Governmental
Authority, central bank, or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its Applicable Lending
Office) with any request or directive (whether or not having the force of law)
of any such Governmental Authority, central bank, or comparable agency:
(i) shall subject such Lender (or its Applicable Lending Office) to
any tax, duty, or other charge with respect to any Eurodollar Loans, its
Notes, or its obligation to make Eurodollar Loans, or change the basis of
taxation of any amounts payable to such Lender (or its Applicable Lending
Office) under this Credit Agreement or its Notes in respect of any
Eurodollar Loans (other than taxes imposed on the overall net income of
such Lender by the jurisdiction in which such Lender has its principal
office or such Applicable Lending Office);
45
(ii) shall impose, modify, or deem applicable any reserve, special
deposit, assessment, or similar requirement (other than the Eurodollar
Reserve Requirement utilized in the determination of the Adjusted
Eurodollar Rate) relating to any extensions of credit or other assets of,
or any deposits with or other liabilities or commitments of, such Lender
(or its Applicable Lending Office), including the Commitment of such Lender
hereunder; or
(iii) shall impose on such Lender (or its Applicable Lending Office)
or the London interbank market any other condition affecting this Credit
Agreement or its Notes or any of such extensions of credit or liabilities
or commitments;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office) of making, Converting into, Continuing, or
maintaining any Eurodollar Loans or to reduce any sum received or receivable by
such Lender (or its Applicable Lending Office) under this Credit Agreement or
its Notes with respect to any Eurodollar Loans, then the Borrower shall pay to
such Lender on demand such amount or amounts as will reasonably compensate such
Lender for such increased cost or reduction. If any Lender requests
compensation by the Borrower under this Section 3.9, the Borrower may, by notice
to such Lender (with a copy to the Administrative Agent), suspend the obligation
of such Lender to make or Continue Eurodollar Loans, or to Convert Base Rate
Loans into Eurodollar Loans, until the event or condition giving rise to such
request ceases to be in effect (in which case the provisions of Section 3.10
shall be applicable); provided that such suspension shall not affect the right
--------
of such Lender to receive the compensation so requested. Each Lender shall
promptly notify the Borrower and the Administrative Agent of any event of which
it has knowledge, occurring after the date hereof, which will entitle such
Lender to compensation pursuant to this Section 3.9 and will designate a
different Applicable Lending Office if such designation will avoid the need for,
or reduce the amount of, such compensation and will not, in the judgment of such
Lender, be otherwise disadvantageous to it. Any Lender claiming compensation
under this Section 3.9 shall furnish to the Borrower and the Administrative
Agent a statement setting forth the additional amount or amounts to be paid to
it hereunder which shall be conclusive in the absence of manifest error. In
determining such amount, such Lender may use any reasonable averaging and
attribution methods.
3.10 Treatment of Affected Loans.
---------------------------
If the obligation of any Lender to make any Eurodollar Loan or to Continue,
or to Convert Base Rate Loans into, Eurodollar Loans shall be suspended pursuant
to Section 3.8 or 3.9 hereof, such Lender's Eurodollar Loans shall be
automatically Converted into Base Rate Loans on the last day(s) of the then
current Interest Period(s) for such Eurodollar Loans (or, in the case of a
Conversion required by Section 3.8 hereof, on such earlier date as such Lender
may specify to the Borrower with a copy to the Administrative Agent) and, unless
and until such Lender gives notice as provided below that the circumstances
specified in Section 3.8 or 3.9 hereof that gave rise to such Conversion no
longer exist:
46
(a) to the extent that such Lender's Eurodollar Loans have been so
Converted, all payments and prepayments of principal that would otherwise
be applied to such Lender's Eurodollar Loans shall be applied instead to
its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such Lender
as Eurodollar Loans shall be made or Continued instead as Base Rate Loans,
and all Base Rate Loans of such Lender that would otherwise be Converted
into Eurodollar Loans shall remain as Base Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the Administrative
Agent) that the circumstances specified in Section 3.8 or 3.9 hereof that gave
rise to the Conversion of such Lender's Eurodollar Loans pursuant to this
Section 3.10 no longer exist (which such Lender agrees to do promptly upon such
circumstances ceasing to exist) at a time when Eurodollar Loans made by other
Lenders are outstanding, such Lender's Base Rate Loans shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Eurodollar Loans, to the extent necessary so that, after giving
effect thereto, all Loans held by the Lenders holding Eurodollar Loans and by
such Lender are held pro rata (as to principal amounts, interest rate basis, and
Interest Periods) in accordance with their respective Commitments.
3.11 Taxes.
-----
(a) Any and all payments by the Borrower or any Crescent Guarantor to
or for the account of any Lender or the Administrative Agent hereunder or
under any other Credit Document shall be made free and clear of and without
deduction for any and all present or future taxes, duties, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Lender and the Administrative
Agent, taxes imposed on its income, and franchise taxes imposed on it, by
the United States or any political subdivision thereof or in each case any
taxing authority thereof or therein or otherwise by the jurisdiction under
the laws of which such Lender (or its Applicable Lending Office) or the
Administrative Agent (as the case may be) is organized or any political
subdivision thereof or in each case any taxing authority thereof or therein
(all such non-excluded taxes, duties, levies, imposts, deductions, charges,
withholdings, and liabilities being hereinafter referred to as "Taxes"). If
the Borrower or any Crescent Guarantor shall be required by law to deduct
or withhold any Taxes from or in respect of any sum payable under this
Credit Agreement or any other Credit Document to any Lender or the
Administrative Agent, (i) the sum payable shall be increased as necessary
so that after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under
this Section 3.11) such Lender or the Administrative Agent receives an
amount equal to the sum it would have received had no such deductions been
made, (ii) such Credit Party shall make such deductions and withholdings,
(iii) such Credit Party shall pay the full amount deducted or withheld to
the relevant taxation authority or other authority in accordance with
applicable law, and (iv) such Credit Party shall furnish to the
Administrative Agent, at its address referred
47
to in Section 11.1, the original or a certified copy of a receipt
evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any and all present or
future stamp or documentary taxes and any other excise or property taxes or
charges or similar levies which arise from any payment made under this
Credit Agreement or any other Credit Document or from the execution or
delivery of, or otherwise with respect to, this Credit Agreement or any
other Credit Document (hereinafter referred to as "Other Taxes").
-----------
(c) The Borrower agrees to indemnify each Lender and the Administrative
Agent for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed or asserted by any
jurisdiction on amounts payable under this Section 3.11) paid by such
Lender or the Administrative Agent (as the case may be) and any liability
(including penalties, interest, and expenses) arising therefrom or with
respect thereto.
(d) Each Lender that is not a United States person under Section
7701(a)(30) of the Internal Revenue Code, on or prior to the date of its
execution and delivery of this Credit Agreement in the case of each Lender
listed on the signature pages hereof and on or prior to the date on which
it becomes a Lender in the case of each other Lender, and from time to time
thereafter if requested in writing by the Borrower or the Administrative
Agent (but only so long as such Lender remains lawfully able to do so),
shall provide the Borrower and the Administrative Agent with (i) Internal
Revenue Service Form W-8 BEN or W-8 ECI, as appropriate, or any successor
form prescribed by the Internal Revenue Service, certifying that such
Lender is entitled to benefits under an income tax treaty to which the
United States is a party which reduces to zero the rate of withholding tax
on payments of interest or certifying that the income receivable pursuant
to this Credit Agreement is effectively connected with the conduct of a
trade or business in the United States, (ii) Internal Revenue Service Form
W-8 or W-9, as appropriate, or any successor form prescribed by the
Internal Revenue Service, and/or (iii) any other form or certificate
required by any taxing authority (including any certificate required by
Sections 871(h) and 881(c) of the Internal Revenue Code), certifying that
such Lender is entitled to an exemption from tax on payments pursuant to
this Credit Agreement or any of the other Credit Documents.
(e) For any period with respect to which a Lender has failed to provide
the Borrower and the Administrative Agent with the appropriate form
pursuant to Section 3.11(d) (unless such failure is due to a change in
treaty, law, or regulation occurring subsequent to the date on which a form
originally was required to be provided), such Lender shall not be entitled
to indemnification under Section 3.11(a) or 3.11(b) with respect to Taxes
imposed by the United States; provided, however, that should a Lender,
-------- -------
which is otherwise exempt from or subject to a reduced rate of withholding
tax, become subject to Taxes because of its failure to
48
deliver a form required hereunder, the Borrower shall take such steps as
such Lender shall reasonably request to assist such Lender to recover such
Taxes.
(f) If the Borrower or any Crescent Guarantor is required to pay
additional amounts to or for the account of any Lender pursuant to this
Section 3.11, then such Lender will agree to use reasonable efforts to
change the jurisdiction of its Applicable Lending Office so as to eliminate
or reduce any such additional payment which may thereafter accrue if such
change, in the judgment of such Lender, is not otherwise disadvantageous to
such Lender.
(g) Within thirty (30) days after the date of any payment of Taxes, the
applicable Credit Party shall furnish to the Administrative Agent the
original or a certified copy of a receipt evidencing such payment.
(h) If the Administrative Agent or any Lender shall become aware that
is entitled to a refund in respect of Taxes for which it has been
indemnified by a Credit Party pursuant to this Section, the Administrative
Agent or such Lender shall promptly notify the Borrower of the availability
of such refund and shall apply for such refund at the Borrower's sole cost
and expense. If the Administrative Agent or any Lender shall receive a
refund in respect of any such Taxes as to which it has been indemnified by
a Credit Party pursuant to this Section, the Administrative Agent or such
Lender shall promptly notify the Borrower of such refund and shall, within
30 days of receipt, pay such refund (to the extent of amounts that have
been paid by a Credit Party under this Section with respect to such refund
and not previously reimbursed) to the Borrower, net of all reasonable out-
of-pocket expenses of such Lender or the Administrative Agent and without
interest (other than the interest, if any, included in such refund).
(i) Without prejudice to the survival of any other agreement of the
Borrower or the Crescent Guarantors hereunder, the agreements and
obligations of the Borrower and the Crescent Guarantors contained in this
Section 3.11 shall survive the repayment of the Loans, LOC Obligations and
other obligations under the Credit Documents and the termination of the
Commitments hereunder.
3.12 Compensation.
------------
Upon the request of any Lender, the Borrower shall pay to such Lender such
amount or amounts as shall be sufficient (in the reasonable opinion of such
Lender) to compensate it for any loss, cost, or expense incurred by it as a
result of:
(a) any payment, prepayment, or Conversion of a Eurodollar Loan for any
reason (including, without limitation, the acceleration of the Loans
pursuant to Section 9.2) on a date other than the last day of the Interest
Period for such Loan; or
(b) any failure by the Borrower for any reason (including, without
limitation, the failure of any condition precedent specified in Section 5
to be satisfied)
49
to borrow, Convert, Continue, or prepay a Eurodollar Loan on the date for
such borrowing, Conversion, Continuation, or prepayment specified in the
relevant notice of borrowing, prepayment, Continuation, or Conversion under
this Credit Agreement.
With respect to Eurodollar Loans, such indemnification may include an amount
equal to the excess, if any, of (a) the amount of interest which would have
accrued on the amount so prepaid, or not so borrowed, Converted or Continued,
for the period from the date of such prepayment or of such failure to borrow,
Convert or Continue to the last day of the applicable Interest Period (or, in
the case of a failure to borrow, Convert or Continue, the Interest Period that
would have commenced on the date of such failure) in each case at the applicable
rate of interest for such Eurodollar Loans provided for herein (excluding,
however, the Applicable Percentage included therein, if any) over (b) the amount
of interest (as reasonably determined by such Lender) which would have accrued
to such Lender on such amount by placing such amount on deposit for a comparable
period with leading banks in the interbank Eurodollar market. The covenants of
the Borrower set forth in this Section 3.12 shall survive the repayment of the
Loans, LOC Obligations and other obligations under the Credit Documents and the
termination of the Commitments hereunder.
3.13 Pro Rata Treatment.
------------------
Except to the extent otherwise provided herein:
(a) Loans. Each Revolving Loan advance, each payment or prepayment of
-----
principal of any Revolving Loan (other than Swingline Loans) or
reimbursement obligations arising from drawings under Letters of Credit,
each payment of interest on the Revolving Loans or reimbursement
obligations arising from drawings under Letters of Credit, each payment of
Commitment Fees, each payment of the Letter of Credit Fee, each reduction
of the Revolving Committed Amount and each conversion or extension of any
Revolving Loan (other than Swingline Loans) shall be allocated pro rata
among the Lenders in accordance with the respective Revolving Commitment
Percentages.
(b) Advances. No Lender shall be responsible for the failure or delay
--------
by any other Lender in its obligation to make its ratable share of a
borrowing hereunder; provided, however, that the failure of any Lender to
-------- -------
fulfill its obligations hereunder shall not relieve any other Lender of its
obligations hereunder. Unless the Administrative Agent shall have been
notified by any Lender prior to the date of any requested borrowing that
such Lender does not intend to make available to the Administrative Agent
its ratable share of such borrowing to be made on such date, the
Administrative Agent may assume that such Lender has made such amount
available to the Administrative Agent on the date of such borrowing, and the
Administrative Agent in reliance upon such assumption, may (in its sole
discretion but without any obligation to do so) make available to the
Borrower a corresponding amount. If such corresponding amount is not in fact
made available to the Administrative Agent, the Administrative Agent shall
be able to recover such corresponding amount from such Lender. If such
Lender does not pay such corresponding amount forthwith upon the
50
Administrative Agent's demand therefor, the Administrative Agent will
promptly notify the Borrower, and the Borrower shall immediately pay such
corresponding amount to the Administrative Agent. The Administrative Agent
shall also be entitled to recover from the Lender or the Borrower, as the
case may be, interest on such corresponding amount in respect of each day
from the date such corresponding amount was made available by the
Administrative Agent to the Borrower to the date such corresponding amount
is recovered by the Administrative Agent at a per annum rate equal to (i)
from the Borrower at the applicable rate for the applicable borrowing
pursuant to the Notice of Borrowing and (ii) from a Lender, if paid within
two (2) Business Days of the date such amount was made available by the
Administrative Agent to the Borrower, the Federal Funds Rate and thereafter
at a rate equal to the Base Rate
3.14 Sharing of Payments.
-------------------
The Lenders agree among themselves that, in the event that any Lender shall
obtain payment in respect of any Loan, LOC Obligations or any other obligation
owing to such Lender under this Credit Agreement through the exercise of a right
of setoff, banker's lien or counterclaim, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law or otherwise, or by
any other means, in excess of its pro rata share of such payment as provided for
in this Credit Agreement, such Lender shall promptly purchase from the other
Lenders a Participation Interest in such Loans, LOC Obligations and other
obligations in such amounts, and make such other adjustments from time to time,
as shall be equitable to the end that all Lenders share such payment in
accordance with their respective ratable shares as provided for in this Credit
Agreement. The Lenders further agree among themselves that if payment to a
Lender obtained by such Lender through the exercise of a right of setoff,
banker's lien, counterclaim or other event as aforesaid shall be rescinded or
must otherwise be restored, each Lender which shall have shared the benefit of
such payment shall, by repurchase of a Participation Interest theretofore sold,
return its share of that benefit (together with its share of any accrued
interest payable with respect thereto) to each Lender whose payment shall have
been rescinded or otherwise restored. The Borrower agrees that any Lender so
purchasing such a Participation Interest may, to the fullest extent permitted by
law, exercise all rights of payment, including setoff, banker's lien or
counterclaim, with respect to such Participation Interest as fully as if such
Lender were a holder of such Loan, LOC Obligations or other obligation in the
amount of such Participation Interest. Except as otherwise expressly provided
in this Credit Agreement, if any Lender or the Administrative Agent shall fail
to remit to the Administrative Agent or any other Lender an amount payable by
such Lender or the Administrative Agent to the Administrative Agent or such
other Lender pursuant to this Credit Agreement on the date when such amount is
due, such payments shall be made together with interest thereon for each date
from the date such amount is due until the date such amount is paid to the
Administrative Agent or such other Lender at a rate per annum equal to the
Federal Funds Rate. If under any applicable bankruptcy, insolvency or other
similar law, any Lender receives a secured claim in lieu of a setoff to which
this Section 3.14 applies, such Lender shall, to the extent practicable,
exercise its rights in respect of such secured claim in a manner consistent with
the rights of the Lenders under this Section 3.14 to share in the benefits of
any recovery on such secured claim.
51
3.15 Certain Limitations.
-------------------
The provisions of Sections 3.6, 3.9, 3.10 and 3.11 shall be subject to the
following:
(a) Each Lender that desires compensation or indemnification under
Sections 3.6, 3.9 or 3.11 shall notify the Borrower through the
Administrative Agent of any event occurring after the Closing Date
entitling such Lender to compensation or indemnification under any of such
Sections as promptly as practicable, but in any event within 90 days after
the occurrence of the event giving rise thereto; provided that (i) if any
--------
such Lender fails to give such notice within 90 days after the occurrence
of such an event, such Lender shall only be entitled to compensation or
indemnification in respect of such event accruing under Sections 3.6, 3.9
or 3.11 with respect to the period from and after the date 90 days prior to
the date that such Lender does give notice.
(b) Any notice given by a Lender pursuant to subsection (a) above shall
certify (i) that one of the events described in Sections 3.6, 3.9 or 3.11
has occurred, describing in reasonable detail the nature of such event,
(ii) as to the increased cost, reduced amount receivable or loss or expense
resulting from such event and (iii) as to the additional amount demanded by
such Lender, attaching a reasonably detailed explanation of the calculation
thereof. Such a certificate as to any compensation or indemnification
payable pursuant to Sections 3.6, 3.9 or 3.11, submitted by such Lender
through the Administrative Agent to the Borrower, shall be conclusive and
binding on the parties hereto in the absence of manifest error.
(c) If any Lender requests compensation or indemnification from the
Borrower under Sections 3.6, 3.9 or 3.11, the Borrower may, at its option,
within fifteen (15) days after receipt by the Borrower of written demand
from the affected Lender for payment of such compensation or
indemnification, notify the Administrative Agent and such affected Lender
of its intention to replace the affected Lender. So long as no Event of
Default shall have occurred and be continuing, the Borrower may obtain, at
the Borrower's expense, a replacement Lender for the affected Lender. If
the Borrower obtains a replacement Lender within ninety (90) days following
notice of its intention to do so, the affected Lender must sell and assign
its loans and obligations and any Commitments to such replacement Lender
pursuant to Section 11.3(b) (without giving effect to any requirement
therein that the Administrative Agent consent thereto), for an amount equal
to the principal balance of all Revolving Loans held by the affected Lender
and all accrued interest and Fees with respect thereto through the date of
such sale, provided that the Borrower shall have paid to such affected
--------
Lender the compensation or indemnification that it is entitled to receive
under Sections 3.6, 3.9 or 3.11, through the date of such sale and
assignment. Notwithstanding the foregoing, the Borrower shall not have the
right to obtain a replacement Lender if the affected Lender rescinds its
demand for such compensation or indemnification
52
within fifteen (15) days following its receipt of the Borrower's notice of
intention to replace such affected Lender. Additionally, if the Borrower
gives a notice to the Administrative Agent and an affected Lender of its
intention to replace such affected Lender and does not so replace such
affected Lender within ninety (90) days thereafter, the Borrower's rights
under this Section 3.15(c) shall terminate and the Borrower shall promptly
pay all compensation or indemnification demanded by such affected Lender
pursuant to Sections 3.6, 3.9 or 3.11.
3.16 Payments, Computations, Etc.
---------------------------
(a) Generally. Except as otherwise specifically provided herein, all
---------
payments hereunder shall be made to the Administrative Agent in Dollars in
immediately available funds, without setoff, deduction, counterclaim or
withholding of any kind, at the Administrative Agent's office specified in
Section 11.1 not later than 2:00 P.M. (Dallas, Texas time) on the date when
due; provided that no Default or Event of Default shall be deemed to have
occurred in connection with payments made on the due date but received
after such cut-off time, even though credited for receipt on the following
Business Day. Payments received after such time shall be deemed to have
been received on the next succeeding Business Day. The Administrative Agent
may (but shall not be obligated to) debit the amount of any such payment
which is not made by such time to any ordinary deposit account of the
Borrower or any Crescent Guarantor maintained with the Administrative Agent
(with notice to the Borrower or such Crescent Guarantor). The Borrower
shall, at the time it makes any payment under this Credit Agreement,
specify to the Administrative Agent the Loans, LOC Obligations, Fees,
interest or other amounts payable by the Borrower hereunder to which such
payment is to be applied (and in the event that it fails so to specify, or
if such application would be inconsistent with the terms hereof, the
Administrative Agent shall distribute such payment to the Lenders in such
manner as the Administrative Agent may determine to be appropriate in
respect of obligations owing by the Borrower hereunder, subject to the
terms of Section 3.13(a)). The Administrative Agent will distribute such
payments to such Lenders, if any such payment is received prior to 2:00
P.M. (Dallas, Texas time) on a Business Day in like funds as received prior
to the end of such Business Day and otherwise the Administrative Agent will
distribute such payment to such Lenders on the next succeeding Business
Day. Whenever any payment hereunder shall be stated to be due on a day
which is not a Business Day, the due date thereof shall be extended to the
next succeeding Business Day (subject to accrual of interest and Fees for
the period of such extension), except that in the case of Eurodollar Loans,
if the extension would cause the payment to be made in the next following
calendar month, then such payment shall instead be made on the next
preceding Business Day. Except as expressly provided otherwise herein, all
computations of interest and fees shall be made on the basis of actual
number of days elapsed over a year of 360 days, except with respect to
computation of interest on Base Rate Loans which shall be calculated based
on a year of 365 or 366 days, as appropriate. Interest shall accrue from
and include the date of borrowing, but exclude the date of payment.
53
(b) Allocation of Payments After Event of Default. Notwithstanding any
---------------------------------------------
other provisions of this Credit Agreement to the contrary, after the
occurrence and during the continuance of an Event of Default, all amounts
collected or received on or in respect of the Loans and obligations owing
hereunder and under the other Credit Documents (or other amounts owing
under the Credit Documents in connection therewith) shall be paid over or
delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation reasonable attorneys' fees) of
the collateral agent actually incurred in connection with the execution
of its duties as collateral agent in exercising or attempting to
exercise rights and remedies in respect of the collateral and all
protective advances made with respect thereto;
SECOND, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation reasonable attorneys' fees) of
the Administrative Agent actually incurred in connection with enforcing
the rights and remedies of the Lenders under the Credit Documents and
any protective advances made with respect thereto;
THIRD, to payment of any fees owed to the Administrative Agent;
FOURTH, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation, reasonable attorneys' fees) of
each of the Lenders hereunder actually incurred in connection with
enforcing its rights under the Credit Documents or otherwise with
respect to the Obligations owing to such Lender;
FIFTH, to the payment of all accrued interest and fees on or in
respect of the Obligations;
SIXTH, to the payment of the outstanding principal amount of the
Obligations hereunder (including the payment or cash collateralization
of the outstanding LOC Obligations);
SEVENTH, to all other obligations hereunder and other obligations
which shall have become due and payable under the Credit Documents
otherwise and not repaid pursuant to clauses "FIRST" through "SIXTH"
above; and
EIGHTH, to the payment of the surplus, if any, to whoever may be
lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; and (ii) except as otherwise provided, the Lenders
shall receive amounts ratably in accordance with their respective pro rata
share (based on the proportion that the then outstanding Obligations held
by such Lenders bears to the aggregate amount of Obligations then
54
outstanding) of amounts available to be applied pursuant to clauses
"FOURTH", "FIFTH", "SIXTH" and "SEVENTH" above; and (iii) to the extent
that any amounts available for distribution pursuant to clause "SIXTH"
above are attributable to the issued but undrawn amount of outstanding
Letters of Credit, such amounts shall be held by the Administrative Agent
in a cash collateral account and applied (A) first, to reimburse the
Issuing Lender for any drawings under such Letters of Credit and (B) then,
following the expiration of all Letters of Credit, to all other obligations
of the types described in clauses "FIFTH" and "SIXTH" above in the manner
provided in this Section 3.16(b).
3.17 Evidence of Debt.
----------------
(a) Each Lender shall maintain an account or accounts evidencing each
Loan made by such Lender to the Borrower from time to time, including the
amounts of principal and interest payable and paid to such Lender from time
to time under this Credit Agreement. Each Lender will make reasonable
efforts to maintain the accuracy of its account or accounts and to promptly
update its account or accounts from time to time, as necessary.
(b) The Administrative Agent shall maintain the Register pursuant to
Section 11.3(c), and a subaccount for each Lender, in which Register and
subaccounts (taken together) shall be recorded (i) the amount, type and
Interest Period of each such Loan hereunder, (ii) the amount of any
principal or interest due and payable or to become due and payable to each
Lender hereunder and (iii) the amount of any sum received by the
Administrative Agent hereunder from or for the account of the Borrower or
any Crescent Guarantor and each Lender's share thereof. The Administrative
Agent will make reasonable efforts to maintain the accuracy of the
subaccounts referred to in the preceding sentence and to promptly update
such subaccounts from time to time, as necessary.
(c) The entries made in the accounts, Register and subaccounts
maintained pursuant to subsection (b) of this Section 3.17 (and, if
consistent with the entries of the Administrative Agent, subsection (a))
shall be prima facie evidence of the existence and amounts of the
obligations of the Borrower and the Crescent Guarantors therein recorded
absent manifest error; provided, however, that the failure of any Lender or
-------- -------
the Administrative Agent to maintain any such account, such Register or
such subaccount, as applicable, or any error therein, shall not in any
manner affect the obligation of the Borrower or the Crescent Guarantors to
repay the Loans and obligations owing hereunder and under the other Credit
Documents to such Lender.
SECTION 4
GUARANTY
--------
55
4.1 The Guaranty.
------------
Each of the Crescent Guarantors hereby jointly and severally guarantees to
each Lender, each affiliate of a Lender that enters into a Hedging Agreement,
and the Administrative Agent as hereinafter provided, as primary obligor and not
as surety, the prompt payment of the Guaranteed Obligations in full when due
(whether at stated maturity, as a mandatory prepayment, by acceleration, as a
mandatory cash collateralization or otherwise) strictly in accordance with the
terms thereof. The Crescent Guarantors hereby further agree that if any of the
Guaranteed Obligations are not paid in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise), the Crescent Guarantors will, jointly and
severally, promptly pay the same, without any demand or notice whatsoever, and
that in the case of any extension of time of payment or renewal of any of the
Guaranteed Obligations, the same will be promptly paid in full when due (whether
at extended maturity, as a mandatory prepayment, by acceleration, as a mandatory
cash collateralization or otherwise) in accordance with the terms of such
extension or renewal.
Notwithstanding any provision to the contrary contained herein or in any
other of the Credit Documents or Hedging Agreements, the obligations of each
Crescent Guarantor under this Credit Agreement and the other Credit Documents
shall be limited to an aggregate amount equal to the largest amount that would
not render such obligations subject to avoidance under Section 548 of the
Bankruptcy Code or any comparable provisions of any applicable state law.
4.2 Obligations Unconditional.
-------------------------
The obligations of the Crescent Guarantors under Section 4.1 are joint and
several, absolute and unconditional, irrespective of the value, genuineness,
validity, regularity or enforceability of any of the Credit Documents or Hedging
Agreements, or any other agreement or instrument referred to therein, or any
substitution, release, impairment or exchange of any other guarantee of or
security for any of the Guaranteed Obligations, and, to the fullest extent
permitted by applicable law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor, it being the intent of this Section 4.2 that the
obligations of the Crescent Guarantors hereunder shall be absolute and
unconditional under any and all circumstances. Each Crescent Guarantor agrees
that such Crescent Guarantor shall have no right of subrogation, indemnity,
reimbursement or contribution against the Borrower or any other Guarantor for
amounts paid under this Section 4 until such time as the Lenders (and any
affiliates of Lenders entering into Hedging Agreements) have been paid in full
in respect of all Guaranteed Obligations, all Commitments under this Credit
Agreement have been terminated and no Person or Governmental Authority shall
have any right to request any return or reimbursement of funds from the Lenders
in connection with monies received under the Credit Documents or Hedging
Agreements between any member of the Consolidated Group and any Lender, or any
affiliate of a Lender. Without limiting the generality of the foregoing, it is
agreed that, to the fullest extent permitted by law, the occurrence of any one
or more of the following shall not alter or impair the liability of any
Guarantor hereunder which shall remain absolute and unconditional as described
above:
56
(a) at any time or from time to time, without notice to any Crescent
Guarantor, the time for any performance of or compliance with any of the
Guaranteed Obligations shall be extended, or such performance or compliance
shall be waived;
(b) any of the acts mentioned in any of the provisions of any of the
Credit Documents, any Hedging Agreement between any member of the
Consolidated Group and any Lender, or any affiliate of a Lender, or any
other agreement or instrument referred to in the Credit Documents or such
Hedging Agreements shall be done or omitted;
(c) the maturity of any of the Guaranteed Obligations shall be
accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under any of the
Credit Documents, any Hedging Agreement between any member of the
Consolidated Group and any Lender, or any affiliate of a Lender, or any
other agreement or instrument referred to in the Credit Documents or such
Hedging Agreements shall be waived or any other guarantee of any of the
Guaranteed Obligations or any security therefor shall be released, impaired
or exchanged in whole or in part or otherwise dealt with;
(d) any Lien granted to, or in favor of, the Administrative Agent or
any Lender or Lenders as security for any of the Guaranteed Obligations
shall fail to attach or be perfected; or
(e) any of the Guaranteed Obligations shall be determined to be void or
voidable (including, without limitation, for the benefit of any creditor of
any Guarantor) or shall be subordinated to the claims of any Person
(including, without limitation, any creditor of any Crescent Guarantor).
With respect to its obligations hereunder, each Crescent Guarantor hereby
expressly waives diligence, presentment, demand of payment, protest and all
notices whatsoever, and any requirement that the Administrative Agent or any
Lender exhaust any right, power or remedy or proceed against any Person under
any of the Credit Documents, any Hedging Agreement between any member of the
Consolidated Group and any Lender, or any affiliate of a Lender, or any other
agreement or instrument referred to in the Credit Documents or such Hedging
Agreements, or against any other Person under any other guarantee of, or
security for, any of the Guaranteed Obligations.
4.3 Reinstatement.
-------------
The obligations of the Crescent Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Guaranteed Obligations is rescinded
or must be otherwise restored by any holder of any of the Guaranteed
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Administrative Agent and each Lender on demand for all reasonable costs and
expenses (including, without limitation, reasonable fees and expenses of
counsel) actually incurred by the
57
Administrative Agent or such Lender in connection with such rescission or
restoration, including any such costs and expenses incurred in defending against
any claim alleging that such payment constituted a preference, fraudulent
transfer or similar payment under any bankruptcy, insolvency or similar law.
4.4 Certain Additional Waivers.
--------------------------
Each Crescent Guarantor agrees that such Crescent Guarantor shall have no
right of recourse to security for the Guaranteed Obligations, except through the
exercise of rights of subrogation pursuant to Section 4.2 and through the
exercise of rights of contribution pursuant to Section 4.6.
4.5 Remedies.
--------
The Crescent Guarantors agree that, to the fullest extent permitted by law,
as between the Crescent Guarantors, on the one hand, and the Administrative
Agent and the Lenders, on the other hand, the Guaranteed Obligations may be
declared to be forthwith due and payable as provided in Section 9.2 (and shall
be deemed to have become automatically due and payable in the circumstances
provided in said Section 9.2) for purposes of Section 4.1 notwithstanding any
stay, injunction or other prohibition preventing such declaration (or preventing
the Guaranteed Obligations from becoming automatically due and payable) as
against any other Person and that, in the event of such declaration (or the
Guaranteed Obligations being deemed to have become automatically due and
payable), the Guaranteed Obligations (whether or not due and payable by any
other Person) shall forthwith become due and payable by the Crescent Guarantors
for purposes of Section 4.1. The Crescent Guarantors acknowledge and agree that
their obligations hereunder are secured in accordance with the terms of the
Security Agreements and the other Collateral Documents and that the Lenders may
exercise their remedies thereunder in accordance with the terms thereof.
4.6 Rights of Contribution.
----------------------
The Crescent Guarantors hereby agree as among themselves that, if any
Crescent Guarantor shall make an Excess Payment (as defined below), such
Crescent Guarantor shall have a right of contribution from each other Crescent
Guarantor in an amount equal to such other Crescent Guarantor's Contribution
Share (as defined below) of such Excess Payment. The payment obligations of any
Crescent Guarantor under this Section 4.6 shall be subordinate and subject in
right of payment to the prior payment in full to the Administrative Agent and
the Lenders of the Guaranteed Obligations, and none of the Crescent Guarantors
shall exercise any right or remedy under this Section 4.6 against any other
Crescent Guarantor until payment and satisfaction in full of all of such
Guaranteed Obligations. For purposes of this Section 4.6, (a) "Guaranteed
----------
Obligations" shall mean any obligations arising under the other provisions of
-----------
this Section 4; (b) "Excess Payment" shall mean the amount paid by any Crescent
--------------
Guarantor in excess of its Pro Rata Share of any Guaranteed Obligations; (c)
"Pro Rata Share" shall mean, for any Crescent Guarantor in respect of any
---------------
payment of Guaranteed Obligations, the ratio (expressed as a percentage) as of
the date of such payment of Guaranteed Obligations of (i) the amount by which
the aggregate present fair saleable value of all of its assets and properties
58
exceeds the amount of all debts and liabilities of such Guarantor (including
contingent, subordinated, unmatured, and unliquidated liabilities, but excluding
the obligations of such Crescent Guarantor hereunder) to (ii) the amount by
which the aggregate present fair salable value of all assets and other
properties of the Borrower and all of the Crescent Guarantors exceeds the amount
of all of the debts and liabilities (including contingent, subordinated,
unmatured, and unliquidated liabilities, but excluding the obligations of the
Borrower and the Crescent Guarantors hereunder) of the Borrower and the Crescent
Guarantors; provided, however, that, for purposes of calculating the Pro Rata
-------- -------
Shares of the Crescent Guarantors in respect of any payment of Guaranteed
Obligations, any Crescent Guarantor that became a Crescent Guarantor subsequent
to the date of any such payment shall be deemed to have been a Crescent
Guarantor on the date of such payment and the financial information for such
Crescent Guarantor as of the date such Crescent Guarantor became a Crescent
Guarantor shall be utilized for such Crescent Guarantor in connection with such
payment; and (d) "Contribution Share" shall mean, for any Crescent Guarantor in
------------------
respect of any Excess Payment made by any other Crescent Guarantor, the ratio
(expressed as a percentage) as of the date of such Excess Payment of (i) the
amount by which the aggregate present fair salable value of all of its assets
and properties exceeds the amount of all debts and liabilities of such Crescent
Guarantor (including contingent, subordinated, unmatured, and unliquidated
liabilities, but excluding the obligations of such Crescent Guarantor hereunder)
to (ii) the amount by which the aggregate present fair salable value of all
assets and other properties of the Borrower and the Crescent Guarantors other
than the maker of such Excess Payment exceeds the amount of all of the debts and
liabilities (including contingent, subordinated, unmatured, and unliquidated
liabilities, but excluding the obligations of the Borrower and the Crescent
Guarantors) of the Borrower and the Crescent Guarantors other than the maker of
such Excess Payment; provided, however, that, for purposes of calculating the
-------- -------
Contribution Shares of the Crescent Guarantors in respect of any Excess Payment,
any Crescent Guarantor that became a Crescent Guarantor subsequent to the date
of any such Excess Payment shall be deemed to have been a Crescent Guarantor on
the date of such Excess Payment and the financial information for such Crescent
Guarantor as of the date such Crescent Guarantor became a Crescent Guarantor
shall be utilized for such Crescent Guarantor in connection with such Excess
Payment. This Section 4.6 shall not be deemed to affect any right of
subrogation, indemnity, reimbursement or contribution that any Crescent
Guarantor may have under applicable law against the Borrower in respect of any
payment of Guaranteed Obligations. Notwithstanding the foregoing, all rights of
contribution against any Guarantor shall terminate from and after such time, if
ever, that such Crescent Guarantor shall be relieved of its obligations pursuant
to Section 8.4.
4.7 Guarantee of Payment; Continuing Guarantee.
------------------------------------------
The guarantee in this Section 4 is a guaranty of payment and not of
collection, is a continuing guarantee, and shall apply to all Guaranteed
Obligations whenever arising.
59
SECTION 5
CONDITIONS
----------
5.1 Closing Conditions.
------------------
The obligation of the Lenders to enter into this Credit Agreement and to
make the initial Extensions of Credit shall be subject to satisfaction of the
following conditions (in form and substance acceptable to the Lenders):
(a) Executed Credit Documents. Receipt by the Administrative Agent
-------------------------
of: (i) multiple counterparts of this Credit Agreement, (ii) a Revolving
Note for each Lender and (iii) multiple counterparts of the ▇▇▇▇▇▇▇▇'▇
Guaranty and the Collateral Documents, in each case executed by a duly
authorized officer of each party thereto and in each case conforming to the
requirements of this Credit Agreement.
(b) Legal Opinions. Receipt by the Administrative Agent of multiple
--------------
counterparts of opinions of counsel for the Credit Parties relating to the
Credit Documents and the transactions contemplated therein, in form and
substance satisfactory to the Administrative Agent and the Lenders, and
including, among other things, opinions regarding enforceability of the
Credit Documents and the perfection of the security interests created
thereby.
(c) Financial Information. Receipt by the Lenders of such financial
---------------------
information regarding the members of the Combined Group as may be requested
by, and in each case in form and substance satisfactory to, the
Administrative Agent and the Lenders.
(d) Personal Property Collateral. Receipt by the Administrative Agent
----------------------------
of the following:
(i) UCC Financing Statements. Duly executed UCC financing
------------------------
statements for each jurisdiction as is necessary or appropriate, in
the Administrative Agent's discretion, to perfect the security
interests in the Collateral.
(ii) Certificated Interests. Original certificates evidencing
----------------------
the Capital Stock which is the subject of the Pledge Agreement
(including 100% of the Capital Stock of the Borrower) and the
▇▇▇▇▇▇▇▇'▇ Pledge Agreement, together with undated stock transfer
powers executed in blank.
(iii) Intellectual Property. Such patent, trademark and
---------------------
copyright notices and filings as necessary or appropriate, in the
Administrative Agent's discretion, to perfect the security interests
in Intellectual Property.
60
(e) Evidence of Insurance. Receipt by the Administrative Agent of
---------------------
insurance certificates or policies evidencing casualty insurance (including
all-risk permanent policies) and liability conforming to the requirements
of this Credit Agreement and the other Credit Documents, showing the
Administrative Agent as sole loss payee with respect to the flood hazard
and casualty insurance and as additional insured with respect to liability
insurance, in each case together with evidence of payment of premiums
thereon.
(f) Absence of Legal Proceedings. There shall not exist any action,
----------------------------
suit, investigation or proceeding pending in any court or before any
arbitrator or Governmental Authority which could reasonably be expected to
have a Material Adverse Effect.
(g) Corporate Documents. Receipt by the Administrative Agent of the
-------------------
following (or their equivalent) for each of the Credit Parties:
(i) Charter Documents. Copies of the articles or certificates
-----------------
of incorporation or other charter documents of such Credit Party
certified to be true and complete as of a recent date by the
appropriate Governmental Authority of the state or other jurisdiction
of its incorporation and certified by a secretary or assistant
secretary of such Credit Party to be true and correct as of the
Closing Date.
(ii) Bylaws. A copy of the bylaws, operating agreement or
------
equivalent of such Credit Party certified by a secretary or assistant
secretary of such Credit Party to be true and correct and in force and
effect as of the Closing Date.
(iii) Resolutions. Copies of resolutions of the board of
-----------
directors of such Credit Party approving and adopting the Credit
Documents to which it is a party, the transactions contemplated
therein and authorizing execution and delivery thereof, certified by a
secretary or assistant secretary of such Credit Party to be true and
correct and in force and effect as of the Closing Date.
(iv) Good Standing. Certificates of good standing, existence or
-------------
its equivalent certified as of a recent date by the appropriate
governmental authorities of the state of incorporation and each other
state in which the failure to so qualify and be in good standing would
be reasonably likely to have a material adverse effect on the business
or operations in such state.
(v) Officer's Certificate. An officer's certificate dated as
---------------------
of the Closing Date substantially in the form of Schedule 5.1(g)(v)
------------------
with appropriate insertions and attachments.
(h) Priority of Liens. The Administrative Agent shall have received
-----------------
satisfactory evidence that (i) the Administrative Agent, on behalf of the
Lenders,
61
holds a perfected, first priority Lien on all Collateral (subject only to
Permitted Liens) and (ii) none of the Collateral is subject to any other
Liens other than Permitted Liens.
(i) Officer's Certificates. The Administrative Agent shall have
----------------------
received a certificate or certificates executed by an Executive Officer of
the Borrower as of the Closing Date, in form and substance satisfactory to
the Administrative Agent, stating that (A) the Borrower and each Crescent
Guarantor is in compliance with all existing financial obligations, (B) all
governmental, shareholder and third party consents and approvals, if any,
necessary with respect to the Credit Documents and the transactions
contemplated thereby have been obtained, (C) no action, suit, investigation
or proceeding is pending or to such Executive Officer's knowledge
threatened in any court or before any arbitrator or governmental
instrumentality that purports to affect the Borrower or any Crescent
Guarantor or any transaction contemplated by the Credit Documents, if such
action, suit, investigation or proceeding could have a Material Adverse
Effect, and (D) immediately after giving effect to the initial Loans made
and Letters of Credit issued on the Closing Date, (i) no Default or Event
of Default exists, (ii) all representations and warranties contained herein
and in the other Credit Documents are true and correct in all material
respects and (iii) the Credit Parties are in pro forma compliance with each
of the financial covenants set forth in Section 7.11 (assuming for purposes
hereof that such financial covenants were measured as of, and for the 12-
month period ending on, the most recent fiscal month's end and attaching
detailed calculations demonstrating such pro forma compliance). The
Administrative Agent shall have received a similar certificate executed by
an Executive Officer of ▇▇▇▇▇▇▇▇'▇.
(j) Solvency Certificate. The Administrative Agent shall have
--------------------
received a certificate executed by an Executive Officer of the Borrower as
of the Closing Date, in form and substance satisfactory to the
Administrative Agent, regarding the financial condition, solvency and
related matters of the Borrower and each of the Crescent Guarantors. The
Administrative Agent shall have received a similar certificate executed by
an Executive Officer of ▇▇▇▇▇▇▇▇'▇
(k) Borrowing Base Certificate. Receipt by the Administrative Agent
--------------------------
of a Borrowing Base Certificate dated as of the most recent week-end
available, in form and substance satisfactory to the Administrative Agent
and certified by the chief financial officer of the Borrower to be true and
correct as of the date thereof.
(l) ▇▇▇▇▇▇▇▇'▇ Credit Facility. Receipt by the Administrative Agent
--------------------------
of confirmation of establishment of the $75 million revolving credit
facility pursuant to the ▇▇▇▇▇▇▇▇'▇ Credit Agreement.
(m) Corporate Structure. Receipt by the Administrative Agent of the
-------------------
corporate capital and ownership structure of the members of the
Consolidated Group.
62
(n) Field Audit. Completion of a field audit by representatives of
-----------
the Administrative Agent of the accounts receivable, inventory, accounts
payable, and accounting controls and systems of the members of the Crescent
Consolidated Group with results and findings acceptable to the
Administrative Agent.
(o) Fees and Expenses. Payment by the Borrower and the Crescent
-----------------
Guarantors of all fees and expenses owed by them to the Lenders and the
Administrative Agent, including, without limitation, payment to the
Administrative Agent of the fees set forth in the Administrative Agent's
Fee Letter and payment of any fees to the Documentation Agent.
5.2 Conditions to all Extensions of Credit.
--------------------------------------
The obligation of each Lender to make any Loan or of the Issuing Lender to
issue any Letter of Credit hereunder (including the initial Extension of Credit
to be made hereunder) is subject to the satisfaction of the following conditions
precedent on the date of making such Extension of Credit:
(a) Representations and Warranties. The representations and
------------------------------
warranties made by the Borrower and the Crescent Guarantors herein and in
the other Credit Documents or which are contained in any certificate
furnished at any time under or in connection herewith shall be true and
correct in all material respects on and as of the date of such Extension of
Credit as if made on and as of such date (except for those which expressly
relate to an earlier date and except for changes expressly permitted
therein or as expressly contemplated herein).
(b) No Default or Event of Default. No Default or Event of Default
------------------------------
shall have occurred and be continuing on such date or after giving effect
to the Extension of Credit to be made on such date unless such Default or
Event of Default shall have been waived in accordance with this Credit
Agreement.
(c) ▇▇▇▇▇▇▇▇'▇ Credit Agreement. Extensions of Credit are then
---------------------------
available under the ▇▇▇▇▇▇▇▇'▇ Credit Agreement (that is, upon submission
of appropriate notices and requests).
(d) Additional Conditions to Revolving Loans. If a Revolving Loan is
----------------------------------------
requested pursuant to Sections 2.1 and 2.2, all conditions set forth in
Section 2 shall have been satisfied.
(e) Additional Conditions to Letters of Credit. If the issuance of a
------------------------------------------
Letter of Credit is requested pursuant to Sections 2.1 and 2.2, all
conditions set forth in Section 2 shall have been satisfied.
(f) Additional Conditions to Swingline Loans. If a Swingline Loan is
----------------------------------------
requested pursuant to Sections 2.1 and 2.2, all conditions set forth in
Section 2 shall have been satisfied.
63
Each request for an Extension of Credit (including Continuations and
Conversions) and each acceptance by the Borrower of an Extension of Credit
(including Continuations and Conversions) shall be deemed to constitute a
representation and warranty by the Borrower as of the date of such Extension of
Credit that the applicable conditions in paragraphs (a), (b) and (c), and in
(d), (e) or (f) of this subsection have been satisfied.
SECTION 6
REPRESENTATIONS AND WARRANTIES
------------------------------
To induce the Lenders to enter into this Credit Agreement and to make the
Extensions of Credit hereunder, each of the Borrower and the Crescent Guarantors
hereby represents and warrants to the Administrative Agent and to each Lender
that:
6.1 Financial Condition.
-------------------
Each of the financial statements described below (copies of which have
heretofore been provided to the Administrative Agent for distribution to the
Lenders) have been prepared in accordance with GAAP consistently applied
throughout the periods covered thereby, are complete and correct in all material
respects and present fairly in all material respects the financial condition
(including disclosure of all material liabilities, contingent or otherwise) and
results from operations of the entities and for the periods specified, subject
in the case of interim company-prepared statements to normal year-end
adjustments and the absence of footnotes:
(i) audited consolidated balance sheets for the Borrower and its
subsidiaries dated as of July 31, 1996, July 31, 1997 and July 31, 1998,
together with related audited consolidated statements of income and cash
flows for the fiscal years then ending, certified by Ernst & Young LLP,
certified public accountants;
(ii) company-prepared consolidated balance sheets for the Borrower and
its subsidiaries as of April 30, 1999, together with related consolidated
statements of income and cash flows for the fiscal quarter then ending; and
(iii) after the Closing Date, the annual and quarterly financial
statements provided in accordance with Section 7.1(a) and (b).
6.2 No Changes or Restricted Payments.
---------------------------------
Except as set forth on Schedule 6.2, since the date of the most-recent
------------
annual audited financial statements referenced in Section 6.1(i),
64
(i) for the period to the Closing Date, except as previously disclosed
in writing to the Administrative Agent and the Lenders, (A) there have been
no material sales, transfers or other dispositions of any material part of
the business or property of the members of the Consolidated Group, nor have
there been any material purchases or other acquisitions of any business or
property (including the Capital Stock of any other person) by the members
of the Consolidated Group, which are not reflected in the annual audited or
company-prepared quarterly financial statements referenced in Section
6.1(i) and (ii) hereof, and (B) no Restricted Payments have been declared
or paid by members of the Consolidated Group; and
(ii) there has been no circumstance, development or event relating to
or affecting the members of the Consolidated Group which has had or could
reasonably be expected to have a Material Adverse Effect.
6.3 Organization; Existence; Compliance with Law.
--------------------------------------------
Each of the members of the Consolidated Group (a) is duly organized,
validly existing in good standing under the laws of the jurisdiction of its
incorporation or organization, (b) has the corporate or other necessary power
and authority, and the legal right to own and operate its Property, to lease the
Property it operates as lessee and to conduct the business in which it is
currently engaged, (c) is duly qualified as a foreign entity and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of Property or the conduct of its business requires such
qualification, other than in such jurisdictions where the failure to be so
qualified and in good standing would not, in the aggregate, have a Material
Adverse Effect, and (d) is in compliance with all Requirements of Law
(including, without limitation, Regulation Z), except to the extent that the
failure to comply therewith would not, in the aggregate, be reasonably expected
to have a Material Adverse Effect.
6.4 Power; Authorization; Enforceable Obligations.
---------------------------------------------
Each of the Credit Parties has the corporate or other necessary power and
authority, and the legal right, to make, deliver and perform the Credit
Documents to which it is a party and has taken all necessary corporate or other
action to authorize the execution, delivery and performance by it of the Credit
Documents to which it is a party. No consent or authorization of, filing with,
notice to or other act by or in respect of, any Governmental Authority or any
other Person is required in connection with acceptance of Extensions of Credit
or the making of the guaranties hereunder or with the execution, delivery or
performance of any Credit Documents by the Credit Parties (other than those
which have been obtained, such filings as are required by the Securities and
Exchange Commission and to fulfill other reporting requirements with
Governmental Authorities) or with the validity or enforceability of any Credit
Document against the Credit Parties (except such filings as are necessary in
connection with the perfection of the Liens created by such Credit Documents).
Each Credit Document to which it is a party constitutes a legal, valid and
binding obligation of such Credit Party enforceable against such Credit Party in
accordance with their respective terms, except as enforceability may be limited
by
65
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
6.5 No Legal Bar.
------------
The execution, delivery and performance of the Credit Documents, the
borrowings hereunder and the use of the Extensions of Credit will not violate
any Requirement of Law or any Contractual Obligation of any member of the
Consolidated Group (except those as to which waivers or consents have been
obtained), and will not result in, or require, the creation or imposition of any
Lien on any of its respective properties or revenues pursuant to any Requirement
of Law or Contractual Obligation other than the Liens arising under or
contemplated in connection with the Credit Documents and other than Permitted
Liens. No member of the Consolidated Group is in default under or with respect
to any of its Contractual Obligations in any respect which would reasonably be
expected to have a Material Adverse Effect.
6.6 No Material Litigation and Disputes.
-----------------------------------
(a) No claim, litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the best knowledge
of the Borrower and the Crescent Guarantors, threatened by or against, any
members of the Consolidated Group or against any of their respective
properties or revenues which (i) relate to the Credit Documents or any of
the transactions contemplated hereby or thereby or (ii) would reasonably be
expected to have a Material Adverse Effect. Set forth on Schedule 6.6 is a
------------
summary of all claims, litigation, investigations and proceedings pending
or, to the best knowledge of the Borrower and the Crescent Guarantors,
threatened by or against the members of the Consolidated Group or against
any of their respective properties or revenues as of the Closing Date
which, individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect.
(b) No default exists and, to the best knowledge of the Borrower and
the Crescent Guarantors, no default has been asserted, under any
Contractual Obligations to which any members of the Consolidated Group are
party which individually or in the aggregate could reasonably be expected
to have a Material Adverse Effect.
6.7 No Defaults.
-----------
No Default or Event of Default has occurred and is continuing.
6.8 Ownership and Operation of Property.
-----------------------------------
Each of the members of the Consolidated Group (i) has good record and
marketable title to, or a valid leasehold interest in, all its material real
property, and good title to, or a valid
66
leasehold interest in, all its other material property, and none of such
property is subject to any Lien, except for Permitted Liens, and (ii) has
obtained all material licenses, permits, franchises or other certifications,
consents, approvals and authorizations, governmental or private, necessary to
the ownership of its Property and to the conduct of its business.
6.9 Intellectual Property.
---------------------
Each of the members of the Consolidated Group owns, or has the legal right
to use, all United States trademarks, tradenames, copyrights, patents,
technology, know-how and processes, if any, necessary for each of them to
conduct its business as currently conducted (the "Intellectual Property") except
---------------------
for those the failure to own or have such legal right to use would not be
reasonably expected to have a Material Adverse Effect. Set forth on Schedule
--------
6.9 is a list of Intellectual Property owned and used by members of the
---
Consolidated Group. No claim has been asserted in writing to the Borrower or
any Crescent Guarantor and is pending by any Person challenging or questioning
the use of any such Intellectual Property or the validity or effectiveness of
any such Intellectual Property, and the use of such Intellectual Property by the
members of the Consolidated Group does not infringe on the rights of any Person,
except for such claims and infringements that, in the aggregate, would not be
reasonably expected to have a Material Adverse Effect.
6.10 No Burdensome Restrictions.
--------------------------
No Requirement of Law or Contractual Obligation of the members of the
Consolidated Group would be reasonably expected to have a Material Adverse
Effect.
6.11 Taxes.
-----
Each of the members of the Consolidated Group has filed or caused to be
filed all income tax returns (federal, state, local and foreign) and all other
material tax returns which are required to be filed and has paid (i) all amounts
shown therein to be due (including interest and penalties) and (ii) all other
material taxes, fees, assessments and other governmental charges (including
mortgage recording taxes, documentary stamp taxes and intangibles taxes) owing,
except for such taxes which are not yet delinquent or as are being contested in
good faith by appropriate proceedings for which adequate reserves determined in
accordance with GAAP have been established unless the failure to make any such
payment could give rise to an immediate right to foreclose on a Lien securing
such amounts. No tax claim or assessment has been asserted against members of
the Consolidated Group which if adversely determined would reasonably be
expected to have a Material Adverse Effect.
6.12 ERISA.
-----
Except as would not reasonably be expected to have a Material Adverse
Effect:
(a) During the five-year period prior to the date on which this
representation is made or deemed made: (i) no ERISA Event has occurred,
and, to the best knowledge of the Borrower and the Crescent Guarantors, no
event or condition
67
has occurred or exists as a result of which any ERISA Event could
reasonably be expected to occur, with respect to any Plan; (ii) no
"accumulated funding deficiency," as such term is defined in Section 302 of
ERISA and Section 412 of the Internal Revenue Code, whether or not waived,
has occurred with respect to any Plan; (iii) each Plan has been maintained,
operated, and funded in compliance with its own terms and in material
compliance with the provisions of ERISA, the Internal Revenue Code, and any
other applicable federal or state laws; and (iv) no lien in favor of the
PBGC or a Plan has arisen or is reasonably likely to arise on account of
any Plan.
(b) The actuarial present value of all "benefit liabilities" (as
defined in Section 4001(a)(16) of ERISA), whether or not vested, under each
Single Employer Plan, as of the last annual valuation date prior to the
date on which this representation is made or deemed made (determined, in
each case, in accordance with Financial Accounting Standards Board
Statement 87, utilizing the actuarial assumptions used in such Plan's most
recent actuarial valuation report), did not exceed as of such valuation
date the fair market value of the assets of such Plan.
(c) No member of the Consolidated Group has incurred, or, to the best
knowledge of the Borrower and the Crescent Guarantors, could be reasonably
expected to incur, any withdrawal liability under ERISA to any
Multiemployer Plan or Multiple Employer Plan. No member of the
Consolidated Group would become subject to withdrawal liability under ERISA
if any member of the Consolidated Group were to withdraw completely from
all Multiemployer Plans and Multiple Employer Plans as of the valuation
date most closely preceding the date on which this representation is made
or deemed made. No member of the Consolidated Group has received any
notification that any Multiemployer Plan is in reorganization (within the
meaning of Section 4241 of ERISA), is insolvent (within the meaning of
Section 4245 of ERISA), or has been terminated (within the meaning of Title
IV of ERISA), and no Multiemployer Plan is, to the best knowledge of the
Borrower and the Crescent Guarantors, reasonably expected to be in
reorganization, insolvent, or terminated.
(d) No prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Internal Revenue Code) or breach of fiduciary
responsibility has occurred with respect to a Plan which has subjected or
may subject any member of the Consolidated Group to liability under
Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the
Internal Revenue Code, or under any agreement or other instrument pursuant
to which any member of the Consolidated Group has agreed or is required to
indemnify any person against any such liability.
(e) No member of the Consolidated Group has liability with respect to
"expected post-retirement benefit obligations" within the meaning of the
Financial Accounting Standards Board Statement 106. Each Plan which is a
welfare plan (as defined in Section 3(1) of ERISA) to which Sections 601-
609 of ERISA and Section 4980B of the Internal Revenue Code apply has been
administered in compliance in all material respects of such sections.
68
(f) Neither the execution and delivery of this Credit Agreement nor
the consummation of the financing transactions contemplated thereunder will
involve any transaction which is subject to the prohibitions of Sections
404, 406 or 407 of ERISA by reason of the identity of the Borrower and
members of the Consolidated Group or in connection with which a tax could
be imposed on the Borrower or any member of the Consolidated Group pursuant
to Section 4975 of the Internal Revenue Code. The representation by the
Borrower and the Crescent Guarantors in the preceding sentence is made in
reliance upon and subject to the accuracy of the Lenders' representation in
Section 11.15 with respect to their source of funds and is subject, in the
event that the source of the funds used by the Lenders in connection with
this transaction is an insurance company's general asset account, to the
application of Prohibited Transaction Class Exemption 95-60, 60 Fed. Reg.
35,925 (1995), compliance with Section 401(b)(2) of ERISA or the
regulations issued under Section 401(c)(1)(A) of ERISA, or the issuance of
any other prohibited transaction exemption or similar relief, to the effect
that assets in an insurance company's general asset account do not
constitute assets of an "employee benefit plan" within the meaning of
Section 3(3) of ERISA of a "plan" within the meaning of Section 4975(e)(1)
of the Internal Revenue Code.
(g) No ERISA Affiliate that is not a member of the Consolidated Group
has incurred, or to the best knowledge of the Borrower and the Crescent
Guarantors, could reasonably be expected to incur, any liability under
ERISA, the Code or otherwise in relation to any ERISA Affiliate Plan that
would have a Material Adverse Effect.
6.13 Governmental Regulations, Etc.
-----------------------------
(a) No part of the proceeds of the Extensions of Credit hereunder will
be used, directly or indirectly, for the purpose of purchasing or carrying
any "margin stock" within the meaning of Regulation U. If requested by any
Lender or the Administrative Agent, the Borrower will furnish to the
Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form U-1 referred to in said
Regulation U. No indebtedness being reduced or retired out of the proceeds
of the Extensions of Credit hereunder was or will be incurred for the
purpose of purchasing or carrying any margin stock within the meaning of
Regulation U or any "margin security" within the meaning of Regulation T.
"Margin stock" within the meanings of Regulation U does not constitute more
than 25% of the value of the consolidated assets of the Borrower and its
Subsidiaries. None of the transactions contemplated by this Credit
Agreement (including, without limitation, the direct or indirect use of the
proceeds of the Loans) will violate or result in a violation of the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, or regulations issued pursuant thereto, or Regulation T, U or
X.
(b) None of the members of the Consolidated Group is subject to
regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act or the Investment Company Act of 1940, each as amended.
In addition, none of
69
the members of the Consolidated Group is (i) an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended, and is not controlled by such a company, or (ii) a
"holding company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary" of a "holding
company", within the meaning of the Public Utility Holding Company Act of
1935, as amended.
6.14 Subsidiaries.
------------
Set forth on Schedule 6.14 are all the Subsidiaries of the Borrower as of
-------------
the Closing Date, including the jurisdiction of organization, classes of Capital
Stock (including options, warrants, rights of subscription, conversion and
exchangeability and other similar rights), ownership and ownership percentages
thereof. The outstanding shares of Capital Stock shown have been validly issued,
fully paid and are non-assessable and owned free of Liens other than Permitted
Liens. The outstanding shares of Capital Stock shown are not the subject of buy-
sell, voting trust or other shareholder agreement except as identified on
Schedule 6.14.
-------------
6.15 Purpose of Extensions of Credit.
-------------------------------
The Loans will be used by the Borrower solely to (i) refinance certain
existing Funded Debt of the Borrower and (ii) finance working capital and other
general corporate purposes of the Borrower and its Subsidiaries.
6.16 Environmental Matters.
---------------------
Except as would not reasonably be expected to have a Material Adverse
Effect:
(a) Each of the facilities and properties owned, leased or operated by
the members of the Consolidated Group (the "Subject Properties") and all
------------------
operations at the Subject Properties are in compliance with all applicable
Environmental Laws, and there is no violation of any Environmental Law with
respect to the Subject Properties or the businesses operated by the members
of the Consolidated Group (the "Businesses"), and there are no conditions
----------
relating to the Businesses or Subject Properties that could give rise to
liability under any applicable Environmental Laws.
(b) None of the Subject Properties contains, or to the Borrower's
knowledge has previously contained, any Materials of Environmental Concern
at, on or under the Subject Properties in amounts or concentrations that
constitute or constituted a violation of, or could give rise to liability
under, Environmental Laws.
(c) None of the members of the Consolidated Group has received any
written notice of, or written inquiry from any Governmental Authority
regarding, any violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Subject Properties or the
Businesses, nor does any member of the Consolidated
70
Group have knowledge or reason to believe that any such notice will be
received or is being threatened.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Subject Properties, or generated, treated, stored or
disposed of at, on or under any of the Subject Properties or any other
location, in each case by or on behalf any members of the Consolidated
Group in violation of, or in a manner that would be reasonably likely to
give rise to liability under, any applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative action is
pending or, to the best knowledge of the Borrower or any Crescent
Guarantor, threatened, under any Environmental Law to which any member of
the Consolidated Group is or will be named as a party, nor are there any
consent decrees or other decrees, consent orders, administrative orders or
other orders, or other administrative or judicial requirements outstanding
under any Environmental Law with respect to any member of the Consolidated
Group, the Subject Properties or the Businesses.
(f) There has been no release or, threat of release of Materials of
Environmental Concern at or from the Subject Properties, or arising from or
related to the operations (including, without limitation, disposal) of any
member of the Consolidated Group in connection with the Subject Properties
or otherwise in connection with the Businesses, in violation of or in
amounts or in a manner that could give rise to liability under
Environmental Laws.
6.17 Year 2000 Compliance.
--------------------
The Borrower has (i) initiated a review and assessment of all material
areas within its and each of its Subsidiaries' business and operations
(including those affected by key suppliers, vendors and customers) that could be
adversely affected by the "Year 2000 Problem" (that is, the risk that computer
-----------------
applications used by the Borrower or any of its Subsidiaries (or key suppliers,
vendors and customers) may be unable to recognize and perform properly date-
sensitive functions involving certain dates prior to and any date after December
31, 1999), (ii) developed a plan and timeline for addressing the Year 2000
Problem on a timely basis, and (iii) to date, implemented that plan in
accordance with that timetable. Based on the foregoing, the Borrower believes
that all computer applications (including those of its key suppliers, vendors
and customers) that are material to its or any of its Subsidiaries' business and
operations are reasonably expected on a timely basis to be able to perform
properly date-sensitive functions for all dates before and after January 1, 2000
(that is, be "Year 2000 Compliant"), except to the extent that a failure to do
-------------------
so could not reasonably be expected to have a Material Adverse Effect.
6.18 No Material Misstatements.
-------------------------
None of the information, reports, financial statements, exhibits or
schedules, taken as a whole, furnished by or on behalf of any member of the
Consolidated Group to the
71
Administrative Agent or any Lender in connection with the negotiation of the
Credit Documents or included therein or delivered pursuant thereto contained,
contains or will contain any material misstatement of fact or omitted, omits or
will omit to state any material fact necessary to make the statements therein,
in light of the circumstances under which they were, are or will be made, not
materially misleading, provided that to the extent any such information, report,
--------
financial statement, exhibit or schedule was based upon or constitutes a
forecast or projection, each of the Borrower and the Crescent Guarantors
represents only that it acted in good faith and utilized reasonable assumptions
and due care in the preparation of such information, report, financial
statement, exhibit or schedule.
6.19 Labor Matters.
-------------
Except as set forth in Schedule 6.19 as of the Closing Date,
-------------
(i) There are no strikes or lockouts against any members of the
Consolidated Group pending or, to the best knowledge of the Borrower and
the Crescent Guarantors, threatened;
(ii) the hours worked by and payments made to employees of the
Consolidated Group have not been in violation of the Fair Labor Standards
Act or any other applicable federal, state, local or foreign law dealing
with such matters in any case where a Material Adverse Effect would
reasonably be expected to occur as a result of the violation thereof;
(iii) all payments due from members of the Consolidated Group, or for
which any claim may be made against a member of the Consolidated Group, on
account of wages and employee health and welfare insurance and other
benefits, have been paid or accrued as a liability on the books of the
respective members of the Consolidated Group; and
(iv) none of the members of the Consolidated Group is party to a
collective bargaining agreement.
6.20 Security Documents.
------------------
(a) Security Agreement. The Security Agreement is effective to
------------------
create in favor of the Administrative Agent, for the ratable benefit of the
holders of the Secured Obligations identified therein, a legal valid and
enforceable security interest in the Collateral (as defined in the Security
Agreement) owned by the Borrower and the Crescent Guarantors and, when
financing statements in appropriate form are filed in the appropriate
offices for the locations specified in Schedule 2 to the Security
Agreement, the Security Agreement shall constitute a fully perfected Lien
on, and security interest in, all right, title and interest of the grantors
thereunder in such Collateral that may be perfected by filing, recording or
registering a financing statement under the Uniform Commercial Code as in
effect,
72
in each case prior and superior in right to any other Lien on any
Collateral other than Permitted Liens.
(b) Pledge Agreement. The Pledge Agreement is effective to create in
----------------
favor of the Administrative Agent, for the ratable benefit of the holders
of the Secured Obligations identified therein, a legal valid and
enforceable security interest in the Collateral (as defined in the Pledge
Agreement) and, when such Collateral is delivered to the Administrative
Agent or financing statements filed, as applicable, the Pledge Agreement
shall constitute a fully perfected first priority Lien on, and security
interest in, all right, title and interest of the pledgors thereunder in
such Collateral, in each case prior and superior in right to any other
Lien.
(c) Intellectual Property. The Security Agreement together with the
---------------------
Notice of Grant of Security Interest in Trademarks and the Notice of Grant
of Security Interest in Patents filed with the United States Patent and
Trademark Office, and the Notice of Grant of Security Interest in
Copyrights filed with the United States Copyright Office will constitute a
fully perfected Lien on, and security interest in, all right, title and
interest of the grantors thereunder in all Patents and Patent Licenses,
Trademarks and Trademark Licenses and Copyrights and Copyright Licenses
(each as defined in the Security Agreement) and in which a security
interest may be perfected by filing, recording or registration of a Notice
in the United States Patent and Trademark Office and the United States
Copyright Office, in each case prior and superior in right to any other
Lien other than Permitted Liens.
(d) Mortgages. The Mortgages (if any) are effective to create in favor
---------
of the Administrative Agent, for the ratable benefit of the holders of the
Secured Obligations identified therein, a legal, valid and enforceable Lien
on all of the respective grantors' right, title and interest in and to the
Mortgaged Properties thereunder and the proceeds thereof, and constitute
fully perfected Liens on, and security interests in, all right, title and
interest of the grantors in such Mortgaged Properties and the proceeds
thereof, in each case prior and superior in right to any other Lien other
than Permitted Liens.
6.21 Location of Real Property and Leased Premises.
---------------------------------------------
Set forth on Schedule 6.21(a) is a complete and correct list of all real
----------------
property located in the United States and owned or leased by any member of the
Consolidated Group with street address and state where located. Set forth on
Schedule 6.21(b) is a list of all locations where any tangible personal property
----------------
of any member of the Consolidated Group is located, including street address and
state where located. Set forth on Schedule 6.21(c) is the chief executive
----------------
office and principal place of business of each member of the Consolidated Group.
The information contained in the foregoing Schedules will be updated by notice
of the Borrower to the Administrative Agent.
73
6.22 Solvency.
--------
Immediately after giving effect to each Extension of Credit made on or
after the Closing Date, (i) the fair value of the assets of each Credit Party
will exceed its debts and liabilities, subordinated, contingent or otherwise;
(ii) the present fair saleable value of the property of each Credit Party will
be greater than the amount that will be required to pay the probably liability
of its debts and other liabilities, subordinated, contingent or otherwise, as
such debts and other liabilities become absolute and mature; and (iii) each
Credit Party will not have unreasonably small capital with which to conduct the
business in which it is engaged as such business is now conducted and is
proposed to be conducted following the Closing Date.
SECTION 7
AFFIRMATIVE COVENANTS
---------------------
The Borrower and each Crescent Guarantor hereby covenants and agrees that
so long as this Credit Agreement is in effect or any amounts payable hereunder
or under any other Credit Document shall remain outstanding or any Letter of
Credit is outstanding, and until all of the Commitments hereunder shall have
terminated:
7.1 Information Covenants.
---------------------
The Borrower and the Crescent Guarantors will furnish, or cause to be
furnished, to the Administrative Agent and each of the Lenders:
(a) Annual Financial Statements. As soon as available, and in any
---------------------------
event within 90 days after the close of each fiscal year of the members of
the Consolidated Group, a consolidated balance sheet and income statement
of the members of the Consolidated Group as of the end of such fiscal year,
together with related consolidated statements of operations and retained
earnings and of cash flows for such fiscal year, in each case setting forth
in comparative form consolidated figures for the preceding fiscal year, all
such financial information described above to be in reasonable form and
detail and audited by independent certified public accountants of
recognized national standing reasonably acceptable to the Administrative
Agent and whose opinion shall be to the effect that such financial
statements have been prepared in accordance with GAAP (except for changes
with which such accountants concur) and shall not be limited as to the
scope of the audit or qualified as to the status of the members of the
Consolidated Group as a going concern or any other material qualifications
or exceptions.
(b) Monthly Financial Statements. As soon as available, and in any
----------------------------
event within 30 days after the close of each fiscal month of the members of
the Consolidated Group a consolidated balance sheet, income statement and
statements of cash flows for such fiscal month, in each case setting forth
in comparative form consolidated figures
74
for the corresponding period of the preceding fiscal year, all such
financial information described above to be in reasonable form and detail
and reasonably acceptable to the Administrative Agent, and accompanied by a
certificate of an Executive Officer of the Borrower to the effect that such
monthly financial statements fairly present in all material respects the
financial condition of the members of the Consolidated Group and have been
prepared in accordance with GAAP, subject to changes resulting from audit
and normal year-end audit adjustments and the absence of footnotes.
(c) Officer's Certificate. At the time of delivery of the financial
---------------------
statements provided for in Sections 7.1(a) and 7.1(b) above, a certificate
of an Executive Officer of the Borrower substantially in the form of
Schedule 7.1(c), (i) demonstrating compliance with the financial covenants
---------------
contained in Section 7.11 by calculation thereof as of the end of each such
fiscal period and (ii) stating that no Default or Event of Default exists,
or if any Default or Event of Default does exist, specifying the nature and
extent thereof and what action the Credit Parties propose to take with
respect thereto.
(d) Borrowing Base Certificate. No later than the first Business Day
--------------------------
following the end of the preceding calendar week, or on a more frequent
basis as requested, a statement of the Borrowing Base and its components as
of the end of the immediately preceding week (or such other more frequent
period), in form and content satisfactory to the Administrative Agent and
certified by the chief financial officer or treasurer of the Borrower to be
true and correct as of the date thereof (the "Borrowing Base Certificate")
--------------------------
together with a schedule of the Borrower's and the Crescent Guarantors'
Receivables created since the last such schedule and Borrowing Base
Certificate.
(e) Annual Business Plan and Budgets. Within 30 days after the end of
--------------------------------
each fiscal year of the Borrower, beginning with the fiscal year ending
July 31, 2000, an annual business plan and budget of the members of the
Consolidated Group containing, among other things, pro forma financial
statements for the next fiscal year.
(f) Collateral Reports. Within 15 days after the end of each calendar
------------------
month, in form and detail reasonably satisfactory to the Administrative
Agent, (i) an aging of the accounts receivable of the Borrower and the
Crescent Guarantors, together with a reconciliation to the previous month's
aging of the accounts receivable of the Borrower and the Crescent
Guarantors and to their respective general ledgers, (ii) an aging of the
accounts payable of the Borrower and the Crescent Guarantors, (iii)
inventory reports by category, with additional detail showing additions to
and deletions from the inventory, together with a reconciliation to the
general ledger and (iv) with the delivery of each of the foregoing, a
certificate of the Borrower executed by the chief financial officer or
treasurer thereof certifying as to the accuracy and completeness of the
foregoing. If any of the records of the Borrower and the Crescent
Guarantors or reports of the Collateral are prepared by an accounting
service or other agent, the Borrower and the Crescent Guarantors hereby
authorize
75
such service or agent to deliver such records, reports, and related
documents to the Administrative Agent, for distribution to the Lenders.
(g) Consumer Credit Policies. Concurrently with delivery of the
------------------------
quarterly company-prepared financial statements under subsection (b)
hereof, the Borrower and the Crescent Guarantors will provide written
notice to the Administrative Agent of material changes or modifications in
their consumer credit policies and practices, together with a written
explanation, in substance and detail reasonably satisfactory to the
Administrative Agent, of such changes or modifications to such consumer
credit policies or practices.
(h) Investment Banking Fees. Advance notice to the Administrative
-----------------------
Agent of all investment banking fees in excess of $250,000 payable by
members of the Crescent Consolidated Group in connection with any single
transaction, together with a certification from the Borrower that after
giving effect thereto no Default or Event of Default shall exist on a Pro
Forma Basis.
(i) Auditor's Reports. Promptly upon receipt thereof, a copy of any
-----------------
other report or "management letter" submitted by independent accountants to
any member of the Consolidated Group in connection with any annual, interim
or special audit of the books of such Person.
(j) Reports. Promptly upon transmission or receipt thereof, (i) copies
-------
of any filings and registrations with, and reports to or from, the
Securities and Exchange Commission, or any successor agency (excluding any
exhibits thereto and any registration statements filed on Form S-8), and
copies of all financial statements, proxy statements, notices and reports
as any member of the Consolidated Group shall send to its stockholders or
to a holder of any Indebtedness owed by any member of the Consolidated
Group in its capacity as such a holder and (ii) upon the request of the
Administrative Agent, all reports and written information to and from the
United States Environmental Protection Agency, or any state or local agency
responsible for environmental matters, the United States Occupational
Health and Safety Administration, or any state or local agency responsible
for health and safety matters, or any successor agencies or authorities
concerning environmental, health or safety matters.
(k) Notices. Upon any Executive Officer of the Borrower or any
-------
Crescent Guarantor obtaining actual knowledge thereof, the Borrower will
give written notice to the Administrative Agent immediately of (i) the
occurrence of an event or condition consisting of a Default or Event of
Default, specifying the nature and existence thereof and what action the
Credit Parties propose to take with respect thereto, and (ii) the
occurrence of any of the following with respect to any member of the
Consolidated Group (A) the pendency or commencement of any litigation,
arbitral or governmental proceeding against such Person which if adversely
determined would reasonably be expected to have a Material Adverse Effect
or (B) the institution of any proceedings against such Person with respect
to, or the receipt of notice by such Person of potential
76
liability or responsibility for violation, or alleged violation of any
federal, state or local law, rule or regulation, including but not limited
to, Environmental Laws, the violation of which could have a Material
Adverse Effect.
(l) ERISA. Upon any Executive Officer of the Borrower or any Crescent
-----
Guarantor obtaining knowledge thereof, the Borrower will give written
notice to the Administrative Agent promptly (and in any event within five
Business Days) of: (i) any event or condition, including, but not limited
to, any Reportable Event, that constitutes, or might reasonably lead to, an
ERISA Event; (ii) with respect to any Multiemployer Plan, the receipt of
notice as prescribed in ERISA or otherwise of any withdrawal liability
assessed against the Credit Parties or any ERISA Affiliates, or of a
determination that any Multiemployer Plan is in reorganization or insolvent
(both within the meaning of Title IV of ERISA); (iii) the failure to make
full payment on or before the due date (including extensions) thereof of
all amounts which any member of the Consolidated Group or any ERISA
Affiliate is required to contribute to each Plan pursuant to its terms and
as required to meet the minimum funding standard set forth in ERISA and the
Internal Revenue Code with respect thereto; or (iv) any change in the
funding status of any Plan that could have a Material Adverse Effect,
together with a description of any such event or condition or a copy of any
such notice and a statement by an Executive Officer of the Borrower briefly
setting forth the details regarding such event, condition, or notice, and
the action, if any, which has been or is being taken or is proposed to be
taken by the Credit Parties with respect thereto. Promptly upon request,
the Borrower and the Crescent Guarantors shall furnish the Administrative
Agent and the Lenders with such additional information concerning any Plan
as may be reasonably requested, including, but not limited to, copies of
each annual report/return (Form 5500 series), as well as all schedules and
attachments thereto required to be filed with the Department of Labor
and/or the Internal Revenue Service pursuant to ERISA and the Internal
Revenue Code, respectively, for each "plan year" (within the meaning of
Section 3(39) of ERISA).
(m) Additional Patents and Trademarks. At the time of delivery of the
---------------------------------
financial statements and reports provided for in Section 7.1(a), a report
signed by an Executive Officer of the Borrower setting forth (i) a list of
registration numbers for all patents, trademarks, service marks, tradenames
and copyrights awarded to any member of the Consolidated Group since the
last day of the immediately preceding fiscal year and (ii) a list of all
patent applications, trademark applications, service ▇▇▇▇ applications,
trade name applications and copyright applications submitted by any member
of the Consolidated Group since the last day of the immediately preceding
fiscal year and the status of each such application, all in such form as
shall be reasonably satisfactory to the Administrative Agent.
(n) Other Information. With reasonable promptness upon any such
-----------------
request, such other information regarding the business, properties or
financial condition of any member of the Consolidated Group as the
Administrative Agent or the Required Lenders may reasonably request.
77
7.2 Preservation of Existence and Franchises.
----------------------------------------
Except as a result of or in connection with a dissolution, merger or
disposition of a Subsidiary permitted under Section 8.4 or Section 8.5, the
Borrower and each Crescent Guarantor will, and will cause each of its
Subsidiaries to, do all things necessary to preserve and keep in full force and
effect its existence and all material rights, franchises and authority.
7.3 Books and Records.
-----------------
The Borrower and each Crescent Guarantor will, and will cause each of its
Subsidiaries to, keep complete and accurate books and records of its
transactions in accordance with good accounting practices on the basis of GAAP
(including the establishment and maintenance of appropriate reserves).
7.4 Compliance with Law.
-------------------
The Borrower and each Crescent Guarantor will, and will cause each of its
Subsidiaries to, comply with all laws, rules, regulations and orders, and all
applicable restrictions imposed by all Governmental Authorities, applicable to
it and its Property if noncompliance with any such law, rule, regulation, order
or restriction could have a Material Adverse Effect.
7.5 Payment of Taxes and Other Indebtedness.
---------------------------------------
The Borrower and each Crescent Guarantor will, and will cause each of its
Subsidiaries to, pay and discharge (a) all taxes, assessments and governmental
charges or levies imposed upon it, or upon its income or profits, or upon any of
its properties, before they shall become delinquent, (b) all lawful claims
(including claims for labor, materials and supplies) which, if unpaid, might
give rise to a Lien upon any of its properties, and (c) except as prohibited
hereunder, all of its other Indebtedness as it shall become due; provided,
--------
however, that no member of the Consolidated Group shall be required to pay any
-------
such tax, assessment, charge, levy, claim or Indebtedness which is being
contested in good faith by appropriate proceedings for which adequate reserves
determined in accordance with GAAP have been established, unless the failure to
make any such payment (i) could give rise to an immediate right to foreclose on
a Lien securing such amounts or (ii) could have a Material Adverse Effect.
7.6 Insurance.
---------
(a) The Borrower and each Crescent Guarantor will, and will cause each
of its Subsidiaries to, at all times maintain in full force and effect
insurance (including worker's compensation insurance, liability insurance,
casualty insurance and business interruption insurance) in such amounts,
covering such risks and liabilities and with such deductibles or self-
insurance retentions as are in accordance with normal industry practice (or
as otherwise required by the Collateral Documents). The Administrative
Agent shall be named as loss payee or mortgagee, as its interest may
appear, and/or additional insured with respect to any such insurance
providing coverage in respect of any Collateral, and each provider of any
such insurance shall
78
agree, by endorsement upon the policy or policies issued by it or by
independent instruments furnished to the Administrative Agent, that it will
give the Administrative Agent ten (10) days prior written notice before any
such policy or policies shall be altered or canceled, and that no act or
default of any member of the Consolidated Group or any other Person shall
affect the rights of the Administrative Agent or the Lenders under such
policy or policies. The present insurance coverage of the members of the
Consolidated Group is outlined as to carrier, policy number, expiration
date, type and amount on Schedule 7.6.
-------------
(b) The proceeds from insurance received from the theft, loss,
physical destruction or damage, taking or similar event shall be used
either to repair, replace or reinvest in the same or similar assets or to
prepay the Loans and Obligations hereunder.
7.7 Maintenance of Property.
-----------------------
The Borrower and each Crescent Guarantor will, and will cause each of its
Subsidiaries to, maintain and preserve its properties and equipment material to
the conduct of its business in good repair, working order and condition, normal
wear and tear and casualty and condemnation excepted, and will make, or cause to
be made, in such properties and equipment from time to time all repairs,
renewals, replacements, extensions, additions, betterments and improvements
thereto as may be needed or proper, to the extent and in the manner customary
for companies in similar businesses, except, as to any of the foregoing
activities, where the activities are not otherwise prohibited hereunder.
7.8 Performance of Obligations.
--------------------------
The Borrower and each Crescent Guarantor will, and will cause each of its
Subsidiaries to, perform in all material respects all of its obligations under
the terms of all material agreements, indentures, mortgages, security agreements
and other debt instruments to which it is a party or by which it is bound except
to the extent that the failure to do so will not result in a Material Adverse
Effect.
7.9 Use of Proceeds.
---------------
The Borrower will use the proceeds of Extensions of Credit solely for the
purposes set forth in Section 6.15.
79
7.10 Audits/Inspections.
------------------
Upon reasonable notice and during normal business hours, the Borrower and
each of the Crescent Guarantors will, and will cause each of its Subsidiaries
to, permit representatives appointed by the Administrative Agent, including,
without limitation, independent accountants, agents, attorneys, and appraisers
to visit and inspect its property, including its books and records, its accounts
receivable and inventory, its facilities and its other business assets, and to
make photocopies or photographs thereof and to write down and record any
information such representative obtains and shall permit the Administrative
Agent or its representatives to investigate and verify the accuracy of
information provided to the Lenders and to discuss all such matters with the
officers, employees and representatives of such Person. The cost of such
inspections and audits shall be at the expense of the Administrative Agent and
the Lenders or at the expense of the Borrower as provided in the Security
Agreement. Lenders, and their representatives may accompany the Administrative
Agent and its representatives on any such inspection or audit at their own
expense.
7.11 Financial Covenants.
-------------------
(a) Combined Leverage Ratio. As of the end of each fiscal quarter for
-----------------------
the ▇▇▇▇▇▇▇▇'▇ Consolidated Group, the Combined Leverage Ratio shall be not
greater than:
Closing Date through December 30, 2000 4.0:1.0
December 31, 2000 and thereafter 3.5:1.0
(b) Consolidated Fixed Charge Coverage Ratio. As of the end of each
----------------------------------------
fiscal quarter, the Consolidated Fixed Charge Coverage Ratio shall be not
less than 1.1:1.0.
(c) Capital Expenditures. Consolidated Capital Expenditures for any
--------------------
fiscal year shall not exceed an amount equal to (i) 20% of Consolidated
EBITDAR for the immediately preceding fiscal year plus (ii) the unused
----
amount available for Consolidated Capital Expenditures under this Section
7.11 for the immediately preceding fiscal year (excluding any carry forward
available from any prior fiscal year).
7.12 Additional Guarantors.
---------------------
As soon as practicable and in any event within 30 days after any Person
becomes a Domestic Subsidiary of the Borrower, the Borrower shall provide the
Administrative Agent with written notice thereof setting forth information in
reasonable detail describing all of the assets of such Domestic Subsidiary and
shall (i) cause such Domestic Subsidiary to execute a Joinder Agreement, and
cause 100% of the issued and outstanding Capital Stock of such Person to be
delivered to the Administrative Agent (together with undated stock powers signed
in blank) and pledged to the Administrative Agent pursuant to an appropriate
pledge agreement(s) in substantially the form of the Pledge Agreement
80
delivered on the Closing Date and otherwise in form acceptable to the
Administrative Agent, and (ii) cause such Domestic Subsidiary to (A) if such
Domestic Subsidiary has any Eligible Real Property which is deemed material by
the Administrative Agent or the Required Lenders, deliver to the Administrative
Agent, with respect to each such Eligible Real Property, (1) a fully executed
and notarized Mortgage, (2) copies of recent ALTA surveys of each such Mortgaged
Property by registered engineers or land surveyors (including the location of
special flood hazard areas), (3) standard ALTA mortgagee policies insuring the
priority of the Mortgage (4) appraisals of such Mortgaged Property and (5)
copies of environmental reports and other environmental documentation, if any,
relating to such Mortgaged Property, all in form, content and scope reasonably
satisfactory to the Administrative Agent and (B) deliver such other
documentation as the Administrative Agent may reasonably request in connection
with the foregoing, including, without limitation, appropriate UCC-1 financing
statements, certified resolutions and other organizational and authorizing
documents of such Domestic Subsidiary, favorable opinions of counsel to such
Domestic Subsidiary (which shall cover, among other things, the legality,
validity, binding effect and enforceability of the documentation referred to
above and the perfection of the Administrative Agent's liens thereunder).
7.13 Pledged Assets.
--------------
The Borrower and each Crescent Guarantor will cause (i) all of its personal
property located in the United States other than Excluded Property and (ii) to
the extent deemed to be material and requested by the Administrative Agent or
the Required Lenders, (A) all of its owned real property (wherever located)
other than Excluded Property and (B) all of its leased real property (wherever
located) other than Excluded Property, to be subject at all times to first
priority, perfected (in the case of personal property the perfection of a
security interest therein is governed by the Uniform Commercial Code or by
filing appropriate notices of security interests in the United States Patent and
Trademark Office or the United States Copyright Office, as applicable) and, in
the case of real property (whether leased or owned), title insured Liens to
secure the Loans and obligations owing hereunder and under the other Credit
Documents pursuant to the terms and conditions of the Collateral Documents or,
with respect to any such property acquired subsequent to the Closing Date, such
other additional security documents as the Administrative Agent shall reasonably
request, subject in any case to Permitted Liens. With respect to any real
property acquired by the Borrower or any Crescent Guarantor subsequent to the
Closing Date and required by this Section 7.13 to be pledged to secure the Loans
and obligations owing hereunder and under the other Credit Documents, such
Person will cause to be delivered to the Administrative Agent with respect to
such real property documents, instruments and other items of the types required
to be delivered pursuant to Section 7.12 in form acceptable to the
Administrative Agent. Without limiting the generality of the above, the
Borrower and the Crescent Guarantors will cause 100% of the issued and
outstanding Capital Stock of the Borrower and each Domestic Subsidiary of the
Borrower to be subject at all times to a first priority, perfected Lien to
secure the Loans and obligations owing hereunder and under the other Credit
Documents pursuant to the terms and conditions of the Collateral Documents or
such other security documents as the Administrative Agent shall reasonably
request.
81
If, subsequent to the Closing Date, the Borrower or any Crescent Guarantor
shall (a) acquire any intellectual property, securities, instruments, chattel
paper or other personal property required to be pledged to the Administrative
Agent as Collateral hereunder or under any of the Collateral Documents or (b)
acquire or lease any real property, the Borrower and the Crescent Guarantors
shall promptly notify the Administrative Agent of same. The Borrower and each
Crescent Guarantor shall, and shall cause each of its Subsidiaries to, take such
action (including but not limited to the actions set forth in Section 5.1(d) and
Section 7.12) at its own expense as requested by the Administrative Agent to
ensure that the Administrative Agent has a first priority perfected Lien to
secure the Loans and obligations owing hereunder and under the other Credit
Documents in all Collateral, subject only to Permitted Liens. The Borrower and
each Crescent Guarantor shall, and shall cause each of its Subsidiaries to,
adhere to the covenants regarding the location of personal property as set forth
in the Security Agreement.
7.14 Year 2000 Compliance.
--------------------
The Borrower and each Crescent Guarantor will promptly notify the
Administrative Agent in the event the Borrower or any Crescent Guarantor
discovers or determines that any computer application (including those of its
key suppliers, vendors and customers) that is material to its or any of its
Subsidiaries' business and operations will not be Year 2000 Compliant, except to
the extent that such failure could not reasonably be expected to have a Material
Adverse Effect.
7.15 Interest Rate Protection.
------------------------
The Borrower shall, within 60 days of the Closing Date, enter into interest
protection agreements protecting against fluctuations in interest rates as to
which the material terms are reasonably satisfactory to the Administrative Agent
and the Required Lenders, and providing, among other things, a principal
coverage amount of at least $40 million with a duration of at least three (3)
years.
SECTION 8
NEGATIVE COVENANTS
------------------
The Borrower and each Crescent Guarantor hereby covenants and agrees that
so long as this Credit Agreement is in effect or any amounts payable hereunder
or under any other Credit Document shall remain outstanding or any Letter of
Credit is outstanding, and until all of the Commitments hereunder shall have
terminated:
82
8.1 Indebtedness.
------------
The Borrower and the Crescent Guarantors will not permit any member of the
Consolidated Group to contract, create, incur, assume or permit to exist any
Indebtedness, except:
(a) Indebtedness existing or arising under this Credit Agreement or
the other Credit Documents;
(b) Indebtedness of the Borrower and its Subsidiaries set forth on
Schedule 8.1, and renewals, refinancings and extensions thereof on terms
------------
and conditions which, taken as a whole, are no less favorable to such
Person than such existing Indebtedness;
(c) purchase money Indebtedness (including for purposes hereof
obligations in respect of Capital Leases or Synthetic Leases) hereafter
incurred by the Borrower or any of its Subsidiaries to finance the purchase
of fixed assets and any refinancing thereof; provided that (i) the total of
--------
all such Indebtedness for the Borrower and its Subsidiaries taken together
shall not exceed an aggregate principal amount of $5,000,000 at any one
time outstanding; (ii) such Indebtedness when incurred shall not exceed the
purchase price of the asset(s) financed; and (iii) no such Indebtedness
shall be refinanced for a principal amount in excess of the principal
balance outstanding thereon at the time of such refinancing;
(d) obligations of the Borrower or any of its Subsidiaries owing under
interest rate, commodities and foreign currency exchange protection
agreements entered into in the ordinary course of business to manage
existing or anticipated risks and not for speculative purposes;
(e) unsecured intercompany Indebtedness owing by a member of the
Consolidated Group to another member of the Consolidated Group or to any
member of the ▇▇▇▇▇▇▇▇'▇ Consolidated Group (subject, however, to the
limitations of Section 8.6 in the case of the member of the Consolidated
Group extending the loan, advance or credit);
(f) Support Obligations given by members of the Consolidated Group
with respect to any Indebtedness permitted under this Section 8.1; and
(g) other unsecured Funded Debt of the Borrower and its Subsidiaries
in an aggregate outstanding principal amount of up to $5,000,000 at any
time.
8.2 Liens.
-----
The Borrower and the Crescent Guarantors will not permit any member of the
Consolidated Group to contract, create, incur, assume or permit to exist any
Lien with respect to any of its Property, whether now owned or after acquired,
except for Permitted Liens.
83
8.3 Nature of Business.
------------------
The Borrower and the Crescent Guarantors will not permit any member of the
Consolidated Group to substantively alter the character or conduct of the
business conducted by such Person as of the Closing Date and any business
ancillary or complimentary thereto.
8.4 Merger and Consolidation, Dissolution and Acquisitions.
------------------------------------------------------
(a) No member of the Consolidated Group will enter into any
transaction of merger or consolidation, except that
(i) any member of the Crescent Consolidated Group (other than the
Parent) may be a party to a transaction of merger or consolidation
with another member of the Crescent Consolidated Group (other than the
Parent); provided that (A) if the Borrower is a party to such
--------
transaction, it shall be the surviving entity, and (B) in any event,
the surviving entity shall be a Domestic Subsidiary and, if it is not
already a Credit Party, it shall execute and deliver such joinder and
pledge agreements as may be necessary for compliance with the
provisions of Section 7.12 and 7.13; and
(ii) a Subsidiary of the Borrower may enter into a transaction of
merger or consolidation in connection with an Asset Disposition
permitted under Section 8.5.
(b) No member of the Consolidated Group, other than a Wholly Owned
Subsidiary of the Borrower (and then only if no Material Adverse Effect
shall result on account thereof), may dissolve, liquidate or wind up its
affairs.
(c) No member of the Consolidated Group shall make any Acquisition
(except as expressly permitted by the provisions of clause (a) of this
Section), without the prior written consent of the Required Lenders.
8.5 Asset Dispositions.
------------------
The Borrower and the Crescent Guarantors will not permit any member of the
Consolidated Group to make any Asset Disposition (including, without limitation,
any Sale and Leaseback Transaction), unless
(i) the sale, lease or other disposition is to a member of the
Crescent Consolidated Group or a member of the ▇▇▇▇▇▇▇▇'▇ Consolidated
Group, which, in any such case, is a Guarantor hereunder;
(ii) such Asset Disposition is in connection with the closing of store
locations in the ordinary course of business;
84
(iii) such Asset Disposition is the result of theft, loss, physical
destruction or damage, taking or similar event with respect to the assets
subject to such Asset Disposition and the proceeds from insurance resulting
from such Asset Disposition are used to repair, replace or reinvest in the
same or similar assets; or
(iv) in all other cases, (A) at least seventy-five percent (75%) of
the consideration paid therefor shall consist of cash and Cash Equivalents,
(B) if the subject transaction involves Capital Stock of a Subsidiary, the
subject transaction is of a controlling interest in such Subsidiary, (C)
the aggregate net book value of all assets sold, leased or otherwise
disposed of shall not exceed $5,000,000 in any fiscal year, (D) no Default
or Event of Default shall exist immediately after giving effect thereto,
and (E) the Borrower shall have demonstrated compliance with the financial
covenants hereunder on a Pro Forma Basis after giving effect to the
disposition and shall have delivered to the Administrative Agent a Pro
Forma Compliance Certificate (including reaffirmation of the
representations and warranties hereunder as of such date before and after
giving effect to such transaction) in connection therewith.
The Administrative Agent will promptly deliver to the Borrower upon
request, at the Borrower's expense, such release documentation (including
delivery of applicable stock certificates) as may be reasonably requested to
give effect to the release of subject assets from the security interests
securing the obligations hereunder in connection with Asset Dispositions
permitted hereunder.
8.6 Investments.
-----------
The Borrower and the Crescent Guarantors will not permit any member of the
Consolidated Group to make or permit to exist Investments in or to any Person,
except for Permitted Investments.
8.7 Restricted Payments.
-------------------
Neither the Borrower nor the Parent will make any Restricted Payments
without the prior written consent of the Required Lenders, except that the
Parent may reacquire or otherwise take back its Capital Stock in connection with
the forgiveness of indebtedness of up to $700,000 in the aggregate in any fiscal
year owing by employees in connection with purchases of Capital Stock by such
employees under the Crescent Jewelers, Inc. 1992 Restricted Stock Purchase Plan,
so long as no Default or Event of Default shall exist immediately prior to
giving effect thereto or immediately thereafter after giving effect thereto on a
Pro Forma Basis.
8.8 Modifications and Payments in respect of Other Funded Debt.
----------------------------------------------------------
None of the members of the Consolidated Group will
85
(a) After the issuance thereof, amend or modify (or permit the
amendment or modification of) the terms of any Subordinated Debt in a
manner adverse to the interests of the Lenders (including specifically any
amendment of the terms of subordination, shortening any maturity or average
life to maturity or requiring any payment sooner than previously scheduled
or increasing the interest rate or fees applicable thereto) or in a manner
prohibited by the subordination provisions thereof; or
(b) Make any prepayment, redemption, defeasance or acquisition for
value of (including without limitation, by way of depositing money or
securities with the trustee with respect thereto before due for the purpose
of paying when due), or refund, refinance or exchange of any Funded Debt
(other than the Indebtedness under the Credit Documents and intercompany
Indebtedness permitted hereunder) other than regularly scheduled payments
of principal and interest on such Funded Debt, except in connection with a
refinancing or refunding permitted hereunder.
8.9 Transactions with Affiliates.
----------------------------
The Borrower and the Crescent Guarantors will not permit any member of the
Consolidated Group to enter into or permit to exist any transaction or series of
transactions with any officer, director, shareholder, Subsidiary or Affiliate of
such Person other than (a) advances of working capital to any member of the
Crescent Consolidated Group other than the Parent, (b) transfers of cash and
assets to any member of the Crescent Consolidated Group other than the Parent,
(c) transactions permitted by Section 8.1, Section 8.4, Section 8.5, Section
8.6, or Section 8.7, (d) normal compensation and reimbursement of expenses of
officers and directors and (e) except as otherwise specifically limited in this
Credit Agreement, other transactions which are entered into on terms and
conditions substantially as favorable to such Person as would be obtainable by
it in a comparable arms-length transaction with a Person other than an officer,
director, shareholder, Subsidiary or Affiliate.
8.10 Fiscal Year; Organizational Documents.
-------------------------------------
The Borrower and the Crescent Guarantors will not permit any member of the
Consolidated Group to amend, modify or change its articles of incorporation (or
corporate charter or other similar organizational document) or bylaws (or other
similar document) without the prior written consent of the Required Lenders
which consent shall not be unreasonably withheld.
8.11 Ownership of Subsidiaries; Limitations on Parent.
------------------------------------------------
Notwithstanding any other provisions of this Credit Agreement to the
contrary:
(a) The Borrower and the Crescent Guarantors will not permit any
member of the Consolidated Group to (i) permit any Person (other than the
Borrower or any Wholly Owned Subsidiary of the Borrower) to own any Capital
86
Stock of any Subsidiary of the Borrower, except (A) to qualify directors
where required by applicable law or to satisfy other requirements of
applicable law with respect to the ownership of Capital Stock of Foreign
Subsidiaries or (B) as a result of or in connection with a dissolution,
merger, consolidation or disposition of a Subsidiary permitted under
Section 8.4 or Section 8.5, (ii) permit any Subsidiary of the Borrower to
issue any shares of preferred Capital Stock or (iii) permit, create, incur,
assume or suffer to exist any Lien on any Capital Stock of any Subsidiary
of the Borrower, except for Permitted Liens.
(b) The Parent shall not (i) hold any assets other than the Capital
Stock of the Borrower, (ii) have any liabilities other than (A) the
liabilities under the Credit Documents, (B) tax liabilities in the ordinary
course of business, (C) loans and advances permitted under Sections 8.1 and
8.6 and (D) corporate, administrative and operating expenses in the
ordinary course of business or (iii) engage in any business other than (A)
owning the Capital Stock of the Borrower and activities incidental or
related thereto and (B) acting as a Guarantor hereunder and pledging its
assets to the Administrative Agent, for the benefit of the Lenders,
pursuant to the Collateral Documents to which it is a party.
8.12 No Further Negative Pledges.
---------------------------
The Borrower and the Crescent Guarantors will not permit any member of the
Consolidated Group to enter into, assume or become subject to any agreement
prohibiting or otherwise restricting the creation or assumption of any Lien upon
its properties or assets, whether now owned or hereafter acquired, or requiring
the grant of any security for any obligation if security is given for any other
obligation, except (i) pursuant to or as otherwise expressly permitted by this
Credit Agreement and the other Credit Documents and (ii) pursuant to the terms
of any purchase money Indebtedness permitted by Section 8.1(c) to the extent
such limitations relate only to the property which is the subject of such
financing.
8.13 Limitation on Management Fees.
-----------------------------
The Borrower and the Crescent Guarantors will not permit members of the
Crescent Consolidated Group to pay management or consulting fees (exclusive of
investment banking fees payable in connection with capital raising, debt
placement or other financial transactions which are dealt with under Section
7.1(h) hereof) to any Affiliates (including, without limitation, ▇▇▇▇▇▇ ▇▇▇▇▇▇
and its Affiliates) in an aggregate amount in excess of $500,000 during any
fiscal year.
8.14 Limitation on Foreign Subsidiaries.
----------------------------------
The Borrower and the Crescent Guarantors will not permit any member of the
Crescent Consolidated Group to create, acquire or permit to exist any Foreign
Subsidiary after the Closing Date (other than Sparkle Insurance Company, a Turks
and Caicos company) without the prior written consent of the Required Lenders.
87
SECTION 9
EVENTS OF DEFAULT
-----------------
9.1 Events of Default.
-----------------
An Event of Default shall exist upon the occurrence of any of the following
specified events (each an "Event of Default"):
----------------
(a) Payment. The Borrower or any Crescent Guarantor shall
-------
(i) default in the payment when due of any principal of any of the
Loans or of any reimbursement obligations arising from drawings under
Letters of Credit, or
(ii) default, and such default shall continue for three (3) or
more Business Days, in the payment when due of any interest on the
Loans or on any reimbursement obligations arising from drawings under
Letters of Credit, or of any Fees or other amounts owing hereunder,
under any of the other Credit Documents or in connection herewith or
therewith; or
(b) Representations. Any representation, warranty or statement made or
---------------
deemed to be made by the Borrower or any Crescent Guarantor herein, in any
of the other Credit Documents, or in any statement or certificate delivered
or required to be delivered pursuant hereto or thereto shall prove untrue
in any material respect on the date as of which it was deemed to have been
made; or
(c) Covenants. The Borrower or the Crescent Guarantor shall
---------
(i) default in the due performance or observance of any term,
covenant or agreement contained in Sections 7.2, 7.9, 7.11, or 8.1
through 8.14, inclusive;
(ii) default in the due performance or observance of any term,
covenant or agreement contained in Sections 7.1(a), (b) (c) or (d) and
such default shall continue unremedied for a period of at least five
(5) Business Days after the earlier of an Executive Officer of a
Credit Party becoming aware of such default or notice thereof by the
Administrative Agent; or
(iii) default in the due performance or observance by it
of any term, covenant or agreement (other than those referred to in
subsections (a), (b), (c)(i) or (c)(ii) of this Section 9.1) contained
in this Credit Agreement or any other Credit Document and such default
shall continue unremedied for a period of at least 30 days after the
earlier of an Executive Officer of a Credit Party
88
becoming aware of such default or notice thereof by the Administrative
Agent; or
(d) Other Credit Documents. Except as otherwise expressly permitted
----------------------
herein, any Credit Document shall fail to be in full force and effect in
all material respects or to give the Administrative Agent and/or the
Lenders the Liens, rights, powers and privileges purported to be created
thereby in all material respects, or any Credit Party shall so state in
writing; or
(e) Guaranties. Except as the result of or in connection with a
----------
dissolution, merger or disposition of a Subsidiary permitted under Section
8.4 or Section 8.5, the guaranty given by any Guarantor (including any
Person which becomes a Guarantor after the Closing Date in accordance with
Section 7.12) or any provision thereof shall cease to be in full force and
effect in all material respects, or any Guarantor (including any Person
which becomes a Guarantor after the Closing Date in accordance with Section
7.12) or any Person acting by or on behalf of such Guarantor shall deny or
disaffirm such Guarantor's obligations under such guaranty; or
(f) Bankruptcy, etc. Any Bankruptcy Event shall occur with respect to
---------------
any Credit Party; or
(g) Defaults in respect of Other Indebtedness. With respect to any
-----------------------------------------
Indebtedness (other than Indebtedness outstanding under this Credit
Agreement) in excess of $1,000,000 in the aggregate for the members of the
Consolidated Group taken as a whole, (i) any member of the Consolidated
Group shall (A) default in any payment (beyond the applicable grace period
with respect thereto, if any) with respect to any such Indebtedness, or (B)
the occurrence and continuance of a default in the observance or
performance relating to such Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event or
condition shall occur or condition exist, the effect of which default or
other event or condition is to cause, or to permit, the holder or holders
of such Indebtedness (or trustee or agent on behalf of such holders) to
cause (determined without regard to whether any notice or lapse of time is
required), any such Indebtedness to become due prior to its stated
maturity; or (ii) any such Indebtedness shall be declared due and payable,
or required to be prepaid other than by a regularly scheduled required
prepayment, prior to the stated maturity thereof; or
(h) Judgments. One or more judgments or decrees shall be entered
---------
against one or more of the members of the Consolidated Group involving a
liability of $1,000,000 or more in the aggregate (to the extent not paid or
fully covered by insurance provided by a carrier who has acknowledged
coverage and has the ability to perform) or otherwise having a Material
Adverse Effect and any such judgments or decrees shall not have been
vacated, discharged or stayed or bonded pending appeal within 30 days from
the entry thereof; or
89
(i) ERISA. Any of the following events or conditions, if such event or
-----
condition is reasonably likely to involve the imposition of taxes,
penalties, and other liabilities against members of the Consolidated Group
in an aggregate amount in excess of $1,000,000: (i) any "accumulated
funding deficiency," as such term is defined in Section 302 of ERISA and
Section 412 of the Internal Revenue Code, whether or not waived, shall
exist with respect to any Plan, or any lien shall arise on the assets of
any member of the Consolidated Group in favor of the PBGC or a Plan; (ii)
an ERISA Event shall occur with respect to a Single Employer Plan, which
is, in the reasonable opinion of the Administrative Agent, likely to result
in the termination of such Plan for purposes of Title IV of ERISA; (iii) an
ERISA Event shall occur with respect to a Multiemployer Plan or Multiple
Employer Plan, which is, in the reasonable opinion of the Administrative
Agent, likely to result in (A) the termination of such Plan for purposes of
Title IV of ERISA, or (B) any member of the Consolidated Group incurring
any liability in connection with a withdrawal from, reorganization of
(within the meaning of Section 4241 of ERISA), or insolvency (within the
meaning of Section 4245 of ERISA) of such Plan; (iv) any prohibited
transaction (within the meaning of Section 406 of ERISA or Section 4975 of
the Internal Revenue Code) or breach of fiduciary responsibility shall
occur which may subject any member of the Consolidated Group or any ERISA
Affiliate to any liability under Sections 406, 409, 502(i), or 502(l) of
ERISA or Section 4975 of the Internal Revenue Code, or under any agreement
or other instrument pursuant to which any member of the Consolidated Group
or any ERISA Affiliate has agreed or is required to indemnify any person
against any such liability; or (v) the occurrence of any event described in
the preceding sections (i) - (iv) in relation to an ERISA Affiliate Plan,
if such event actually results in any member of the Consolidated Group's
incurring liability for taxes, penalties or other liabilities in an
aggregate amount in excess of $1,000,000; or
(j) Ownership. There shall occur a Change of Control; or
---------
(k) ▇▇▇▇▇▇▇▇'▇ Credit Agreement. The occurrence and continuance of an
---------------------------
Event of Default under the ▇▇▇▇▇▇▇▇'▇ Credit Agreement or the termination
of commitments in full prior to the stated Termination Date (as extended,
if extended) thereunder.
9.2 Acceleration; Remedies.
----------------------
Upon the occurrence of an Event of Default, and at any time thereafter
unless and until such Event of Default has been waived by the requisite Lenders
(pursuant to the voting requirements of Section 11.6) or cured to the
satisfaction of the requisite Lenders (pursuant to the voting procedures in
Section 11.6), the Administrative Agent shall, upon the request and direction of
the Required Lenders, by written notice to the Borrower take any of the
following actions:
(a) Termination of Commitments. Declare the Commitments terminated
--------------------------
whereupon the Commitments shall be immediately terminated.
90
(b) Acceleration. Declare the unpaid principal of and any accrued
------------
interest in respect of all Loans, any reimbursement obligations arising
from drawings under Letters of Credit and any and all other indebtedness or
obligations of any and every kind owing by the Credit Parties to the
Administrative Agent and/or any of the Lenders hereunder to be due
whereupon the same shall be immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Credit Parties.
(c) Cash Collateral. Direct the Borrower and the Crescent Guarantors
---------------
to pay (and the Borrower and the Crescent Guarantors agree that upon
receipt of such notice, or upon the occurrence of an Event of Default under
Section 9.1(f), they will immediately pay) to the Administrative Agent
additional cash, to be held by the Administrative Agent, for the benefit of
the Lenders, in a cash collateral account as additional security for the
LOC Obligations in respect of subsequent drawings under all then
outstanding Letters of Credit in an amount equal to the maximum aggregate
amount which may be drawn under all Letters of Credits then outstanding.
(d) Enforcement of Rights. Enforce any and all rights and interests
---------------------
created and existing under the Credit Documents including, without
limitation, all rights and remedies existing under the Collateral
Documents, all rights and remedies against a Guarantor and all rights of
set-off.
Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(f) shall occur with respect to the Borrower, then the Commitments shall
automatically terminate and all Loans, all reimbursement obligations arising
from drawings under Letters of Credit, all accrued interest in respect thereof,
all accrued and unpaid Fees and other indebtedness or obligations owing to the
Administrative Agent and/or any of the Lenders hereunder automatically shall
immediately become due and payable without the giving of any notice or other
action by the Administrative Agent or the Lenders.
SECTION 10
AGENCY PROVISIONS
-----------------
10.1 Appointment, Powers and Immunities.
----------------------------------
Each Lender hereby irrevocably appoints and authorizes the Administrative
Agent to act as its agent under this Credit Agreement and the other Credit
Documents with such powers and discretion as are specifically delegated to the
Administrative Agent by the terms of this Credit Agreement and the other Credit
Documents, together with such other powers as are reasonably incidental thereto.
Each Lender further authorizes and directs the Administrative Agent to execute
and deliver releases (or similar agreements) to give effect to the provisions of
this Credit Agreement and the other Credit Documents, including specifically,
without limitation, the provisions of Section 8.5 hereof. The Administrative
Agent (which term as used in this sentence and in Section 10.5 and the first
91
sentence of Section 10.6 shall include its Affiliates and its own and its
Affiliates' officers, directors, employees, and agents): (a) shall not have any
duties or responsibilities except those expressly set forth in this Credit
Agreement and shall not be a trustee or fiduciary for any Lender; (b) shall not
be responsible to the Lenders for any recital, statement, representation, or
warranty (whether written or oral) made in or in connection with any Credit
Document or any certificate or other document referred to or provided for in, or
received by any of them under, any Credit Document, or for the value, validity,
effectiveness, genuineness, enforceability, or sufficiency of any Credit
Document, or any other document referred to or provided for therein or for any
failure by any Credit Party or any other Person to perform any of its
obligations thereunder; (c) shall not be responsible for or have any duty to
ascertain, inquire into, or verify the performance or observance of any
covenants or agreements by any Credit Party or the satisfaction of any condition
or to inspect the property (including the books and records) of any Credit Party
or any of its Subsidiaries or Affiliates; (d) shall not be required to initiate
or conduct any litigation or collection proceedings under any Credit Document;
and (e) shall not be responsible for any action taken or omitted to be taken by
it under or in connection with any Credit Document, except for its own gross
negligence or willful misconduct. The Administrative Agent may employ agents
and attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it with
reasonable care.
10.2 Reliance by Administrative Agent.
--------------------------------
The Administrative Agent shall be entitled to rely upon any certification,
notice, instrument, writing, or other communication (including, without
limitation, any thereof by telephone or telecopy) believed by it to be genuine
and correct and to have been signed, sent or made by or on behalf of the proper
Person or Persons, and upon advice and statements of legal counsel (including
counsel for any Credit Party), independent accountants, and other experts
selected by the Administrative Agent. The Administrative Agent may deem and
treat the payee of any Note as the holder thereof for all purposes hereof unless
and until the Administrative Agent receives and accepts an Assignment and
Acceptance executed in accordance with Section 11.3(b) hereof. As to any
matters not expressly provided for by this Credit Agreement, the Administrative
Agent shall not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully protected
in so acting or refraining from acting) upon the instructions of the Required
Lenders, and such instructions shall be binding on all of the Lenders; provided,
--------
however, that the Administrative Agent shall not be required to take any action
-------
that exposes the Administrative Agent to personal liability or that is contrary
to any Credit Document or applicable law or unless it shall first be indemnified
to its satisfaction by the Lenders against any and all liability and expense
which may be incurred by it by reason of taking any such action.
10.3 Defaults.
--------
The Administrative Agent shall not be deemed to have knowledge or notice of
the occurrence of a Default or Event of Default unless the Administrative Agent
has received
92
written notice from a Lender or a Credit Party specifying such Default or Event
of Default and stating that such notice is a "Notice of Default". In the event
that the Administrative Agent receives such a notice of the occurrence of a
Default or Event of Default, the Administrative Agent shall give prompt notice
thereof to the Lenders. The Administrative Agent shall (subject to Section 10.2)
take such action with respect to such Default or Event of Default as shall
reasonably be directed by the Required Lenders (or such other Lenders as
required by Section 11.6), provided that, unless and until the Administrative
-------- ----
Agent shall have received such directions, the Administrative Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable in
the best interest of the Lenders.
10.4 Rights as a Lender.
------------------
With respect to its Commitment and the Loans made by it, Bank of America
(and any successor acting as Administrative Agent) in its capacity as a Lender
hereunder shall have the same rights and powers hereunder as any other Lender
and may exercise the same as though it were not acting as the Administrative
Agent, and the term "Lender" or "Lenders" shall, unless the context otherwise
indicates, include the Administrative Agent in its individual capacity. Bank of
America (and any successor acting as Administrative Agent) and its Affiliates
may (without having to account therefor to any Lender) accept deposits from,
lend money to, make investments in, provide services to, and generally engage in
any kind of lending, trust, or other business with any Credit Party or any of
its Subsidiaries or Affiliates as if it were not acting as Administrative Agent,
and Bank of America (and any successor acting as Administrative Agent) and its
Affiliates may accept fees and other consideration from any Credit Party or any
of its Subsidiaries or Affiliates for services in connection with this Credit
Agreement or otherwise without having to account for the same to the Lenders.
10.5 Indemnification.
---------------
The Lenders agree to indemnify the Administrative Agent (to the extent not
reimbursed under Section 11.5 hereof, but without limiting the obligations of
the Borrower and the Crescent Guarantors under Section 11.5) ratably (in
accordance with their respective Revolving Commitments (or, if the Revolving
Commitments have been terminated, the outstanding Revolving Loans, Swingline
Loans and Participation Interests in Letters of Credit and Swingline Loan
(including the Participation Interests of the Issuing Lender in Letters of
Credit and the Participation Interests of the Swingline Lender in Swingline
Loans)) for any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including attorneys' fees), or
disbursements of any kind and nature whatsoever that may be imposed on, incurred
by or asserted against the Administrative Agent (including by any Lender) in any
way relating to or arising out of any Credit Document or the transactions
contemplated thereby or any action taken or omitted by the Administrative Agent
under any Credit Document; provided that no Lender shall be liable for any of
--------
the foregoing to the extent they arise from the gross negligence or willful
misconduct of the Person to be indemnified. Without limitation of the
foregoing, each Lender agrees to reimburse the Administrative Agent promptly
upon demand for its
93
ratable share of any costs or expenses payable by the Borrower and the Crescent
Guarantors under Section 11.5, to the extent that the Administrative Agent is
not promptly reimbursed for such costs and expenses by the Borrower and the
Crescent Guarantors. The agreements in this Section 10.5 shall survive the
repayment of the Loans, LOC Obligations and other obligations under the Credit
Documents and the termination of the Commitments hereunder.
10.6 Non-Reliance on Administrative Agent and Other Lenders.
------------------------------------------------------
Each Lender agrees that it has, independently and without reliance on the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Credit Parties and their Subsidiaries and decision to enter into this Credit
Agreement and that it will, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under the Credit
Documents. Except for notices, reports, and other documents and information
expressly required to be furnished to the Lenders by the Administrative Agent
hereunder, the Administrative Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the affairs,
financial condition, or business of any Credit Party or any of its Subsidiaries
or Affiliates that may come into the possession of the Administrative Agent or
any of its Affiliates.
10.7 Successor Administrative Agent.
------------------------------
The Administrative Agent may resign at any time by giving notice thereof to
the Lenders and the Borrower. Upon any such resignation, the Required Lenders
shall have the right to appoint a successor Administrative Agent. If no
successor Administrative Agent shall have been so appointed by the Required
Lenders and shall have accepted such appointment within thirty (30) days after
the retiring Administrative Agent's giving of notice of resignation, then the
retiring Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent which shall be a commercial bank organized under the laws
of the United States having combined capital and surplus of at least
$100,000,000. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor, such successor shall thereupon succeed to and become
vested with all the rights, powers, discretion, privileges, and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. After any retiring
Administrative Agent's resignation hereunder as Administrative Agent, the
provisions of this Section 10 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
Administrative Agent.
10.8 Appointment of Collateral Agent.
-------------------------------
The Lenders hereby appoint, authorize and direct Bank of America, N.A., its
successors and assigns in such capacity, to act as collateral agent under the
Collateral
94
Documents (in such capacity, the "Collateral Agent") with such powers and
----------------
discretion as are specifically delegated to the Collateral Agent by the
terms thereof, together with such other powers as are reasonably incidental
thereto. The Lenders further agree that the Collateral Agent shall be entitled
to the same rights, privileges, powers, immunities and indemnification provided
to the Administrative Agent under this Section 10 to the same extent as provided
to the Administrative Agent.
10.9 Documentation Agent.
-------------------
The Documentation Agent, in its capacity as such, shall have no rights,
powers, duties, liabilities, fiduciary relationships or obligations under this
Credit Agreement or any of the other Credit Documents.
SECTION 11
MISCELLANEOUS
-------------
11.1 Notices.
-------
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (a) when
delivered, (b) when transmitted via telecopy (or other facsimile device) to the
number set out below, (c) the Business Day following the day on which the same
has been delivered prepaid to a reputable national overnight air courier
service, or (d) the third Business Day following the day on which the same is
sent by certified or registered mail, postage prepaid, in each case to the
respective parties at the address, in the case of the Borrower, the Crescent
Guarantors and the Administrative Agent, set forth below, and, in the case of
the Lenders, set forth on Schedule 11.1, or at such other address as such party
-------------
may specify by written notice to the other parties hereto:
if to the Borrower or the Crescent Guarantors:
Crescent Jewelers
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to each of the following:
▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
95
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇'▇ Inc.
▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ Sughia
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ & Bird, LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Administrative Agent:
Bank of America, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇
Agency Services
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Bank of America, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and
Bank of America, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
96
11.2 Right of Set-Off; Adjustments.
-----------------------------
Upon the occurrence and during the continuance of any Event of Default,
each Lender (and each of its affiliates) is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender (or any
of its affiliates) to or for the credit or the account of the Borrower or any
Crescent Guarantor against any and all of the obligations of such Person now or
hereafter existing under this Credit Agreement, under the Notes, under any other
Credit Document or otherwise, irrespective of whether such Lender shall have
made any demand under hereunder or thereunder and although such obligations may
be unmatured. Each Lender agrees promptly to notify any affected Credit Party
after any such set-off and application made by such Lender; provided, however,
-------- -------
that the failure to give such notice shall not affect the validity of such set-
off and application. The rights of each Lender under this Section 11.2 are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) that such Lender may have.
11.3 Benefit of Agreement.
--------------------
(a) This Credit Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of
the parties hereto; provided that none of the Borrower or any of the
--------
Crescent Guarantors may assign or transfer any of its interests and
obligations without prior written consent of each of the Lenders; provided
--------
further that the rights of each Lender to transfer, assign or grant
-------
participations in its rights and/or obligations hereunder shall be limited
as set forth in this Section 11.3.
(b) Each Lender may assign to one or more Eligible Assignees all or a
portion of its rights and obligations under this Credit Agreement
(including, without limitation, all or a portion of its Loans, its Notes,
and its Commitment); provided, however, that
-------- -------
(i) each such assignment shall be to an Eligible Assignee;
(ii) except in the case of an assignment to another Lender, an
Affiliate of an existing Lender or any fund that invests in bank loans
and is advised or managed by an investment advisor to an existing
Lender or an assignment of all of a Lender's rights and obligations
under this Credit Agreement, any such partial assignment shall be in
an amount at least equal to $5,000,000 (or, if less, the remaining
amount of the Commitment being assigned by such Lender) or an integral
multiple of $1,000,000 in excess thereof;
(iii) any such assignment shall be of a constant, not varying,
percentage of all of the Obligations and Commitments hereunder and of
the
97
Obligations and Commitments under the ▇▇▇▇▇▇▇▇'▇ Credit Agreement;
and
(iv) the parties to such assignment shall execute and deliver to
the Administrative Agent for its acceptance an Assignment and
Acceptance in the form of Schedule 11.3(b) hereto, together with any
----------------
Note subject to such assignment and a processing fee of $3,500.
Upon execution, delivery, and acceptance of such Assignment and Acceptance,
the assignee thereunder shall be a party hereto and, to the extent of such
assignment, have the obligations, rights, and benefits of a Lender
hereunder and the assigning Lender shall, to the extent of such assignment,
relinquish its rights and be released from its obligations under this
Credit Agreement. Upon the consummation of any assignment pursuant to this
Section 11.3(b), the assignor, the Administrative Agent and the Borrower
shall make appropriate arrangements so that, if required, new Notes are
issued to the assignor and the assignee. If the assignee is not a United
States person under Section 6701(a)(30) of the Internal Revenue Code, it
shall deliver to the Borrower and the Administrative Agent certification as
to exemption from deduction or withholding of Taxes in accordance with
Section 3.11.
(c) The Administrative Agent shall maintain at its address referred to
in Section 11.1 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and
addresses of the Lenders and the Commitment of, and principal amount of the
Loans owing to, each Lender from time to time (the "Register"). The
--------
entries in the Register shall be conclusive and binding for all purposes,
absent manifest error, and the Credit Parties, the Administrative Agent and
the Lenders may treat each Person whose name is recorded in the Register as
a Lender hereunder for all purposes of this Credit Agreement. The Register
shall be available for inspection by the Credit Parties or any Lender at
any reasonable time and from time to time upon reasonable prior notice.
Any assignment of any loan, commitment, interest or obligation hereunder or
under the other Credit Documents shall be effective only upon an entry with
respect thereto being made in the Register.
(d) Upon its receipt of an Assignment and Acceptance executed by the
parties thereto, together with any Note subject to such assignment and
payment of the processing fee, the Administrative Agent shall, if such
Assignment and Acceptance has been completed and is in substantially the
form of Schedule 11.3(b) hereto, (i) accept such Assignment and Acceptance,
----------------
(ii) record the information contained therein in the Register and (iii)
give prompt notice thereof to the parties thereto.
(e) Each Lender may sell participations to one or more Persons in all
or a portion of its rights, obligations or rights and obligations under
this Credit Agreement (including all or a portion of its Commitment or its
Loans); provided,
--------
98
however, that (i) such Lender's obligations under this Credit Agreement
-------
shall remain unchanged, (ii) such Lender shall remain solely responsible to
the other parties hereto for the performance of such obligations, (iii) the
participant shall be entitled to the benefit of the yield protection
provisions contained in Sections 3.7 through 3.12, inclusive, (but only to
the extent of the Lender selling such participation) and the right of set-
off contained in Section 11.2 (upon exercise of such right of set-off, such
exercising participant shall notify the Borrower), and (iv) the Credit
Parties shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Credit
Agreement, and such Lender shall retain the sole right to enforce the
obligations of the Credit Parties relating to the obligations of the
Borrower and the Guarantors hereunder or in connection herewith owing to
such Lender and to approve any amendment, modification, or waiver of any
provision of this Credit Agreement (other than amendments, modifications,
or waivers decreasing the amount of principal of or the rate at which
interest is payable on such Loans or Notes, extending any scheduled
principal payment date or date fixed for the payment of interest on such
Loans or Notes, or extending its Commitment).
(f) Notwithstanding any other provision set forth in this Credit
Agreement, any Lender may at any time assign and pledge all or any portion
of its Loans and its Notes to any Federal Reserve Bank as collateral
security pursuant to Regulation A and any Operating Circular issued by such
Federal Reserve Bank. No such assignment shall release the assigning
Lender from its obligations hereunder.
(g) Any Lender may furnish any information concerning the members of
the Consolidated Group in the possession of such Lender from time to time
to assignees and participants (including prospective assignees and
participants), subject, however, to the provisions of Section 11.14 hereof.
(h) Each Lender hereby acknowledges and agrees to be bound by the
standstill provisions appearing in Section 28 of the ▇▇▇▇▇▇▇▇'▇ Guaranty
Agreement, and further agrees to cooperate with the Administrative Agent
and ▇▇▇▇▇▇▇▇'▇ in connection with any purchase and assignment of the rights
of the Lenders under this Credit Agreement and the other Credit Documents
as provided in Section 29 of the ▇▇▇▇▇▇▇▇'▇ Guaranty Agreement.
11.4 No Waiver; Remedies Cumulative.
------------------------------
No failure or delay on the part of the Administrative Agent or any Lender
in exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Administrative Agent or any Lender
and any of the Credit Parties shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege hereunder or under
any other Credit Document preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder or thereunder. The
rights and remedies provided herein are cumulative and not exclusive of any
rights or remedies
99
which the Administrative Agent or any Lender would otherwise have. No notice to
or demand on any Credit Party in any case shall entitle the Credit Parties to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Administrative Agent or the Lenders to
any other or further action in any circumstances without notice or demand.
11.5 Expenses; Indemnification.
-------------------------
(a) The Borrower and the Crescent Guarantors jointly and severally
agree to pay on demand all reasonable costs and expenses of the
Administrative Agent actually incurred in connection with the syndication,
preparation, execution, delivery, administration, modification, and
amendment of this Credit Agreement, the other Credit Documents, and the
other documents to be delivered hereunder, including, without limitation,
the reasonable fees and expenses of counsel for the Administrative Agent
with respect thereto and with respect to advising the Administrative Agent
as to its rights and responsibilities under the Credit Documents. The
Borrower and the Crescent Guarantors further jointly and severally agree to
pay on demand all reasonable costs and expenses of the Administrative Agent
and the Lenders, if any (including, without limitation, reasonable
attorneys' fees and expenses and the cost of internal counsel), in
connection with the enforcement (whether through negotiations, legal
proceedings, or otherwise) of the Credit Documents and the other documents
to be delivered thereunder. In addition, the Borrower and the Crescent
Guarantors agree to permit the Administrative Agent to perform periodic
inventory and accounts receivable field audits for members of the
Consolidated Group at the Borrower's expense.
(b) The Borrower and the Crescent Guarantors jointly and severally
agree to indemnify and hold harmless the Administrative Agent and each
Lender and each of their Affiliates and their respective officers,
directors, employees, agents, and advisors (each, an "Indemnified Party")
-----------------
from and against any and all claims, damages, losses, liabilities, costs,
and expenses (including, without limitation, reasonable attorneys' fees
actually incurred) that may be incurred by or asserted or awarded against
any Indemnified Party, in each case arising out of or in connection with or
by reason of (including, without limitation, in connection with any
investigation, litigation, or proceeding or preparation of defense in
connection therewith) the Credit Documents, any of the transactions
contemplated herein or the actual or proposed use of the proceeds of the
Loans, except (a) to the extent such claim, damage, loss, liability, cost,
or expense is found in a final, non-appealable judgment by a court of
competent jurisdiction to have resulted from such Indemnified Party's gross
negligence or willful misconduct, or (b) to the extent such claim, damage,
loss, liability, cost or expense arises solely by or results solely from a
dispute among the Lenders or a dispute between any Lender and the
Administrative Agent, or (c) to the extent such claim, damage, loss,
liability, cost or expense results from a breach of contract by such
Indemnified Party with respect to the Credit Documents. In the case of an
investigation, litigation or other
100
proceeding to which the indemnity in this Section 11.5 applies, such
indemnity shall be effective whether or not such investigation, litigation
or proceeding is brought by any of the Borrower and the Crescent
Guarantors, their respective directors, shareholders or creditors or an
Indemnified Party or any other Person or any Indemnified Party is otherwise
a party thereto and whether or not the transactions contemplated hereby are
consummated. The Borrower and the Crescent Guarantors agree not to assert
any claim against the Administrative Agent, any Lender, any of their
Affiliates, or any of their respective directors, officers, employees,
attorneys, agents, and advisors, on any theory of liability, for special,
indirect, consequential, or punitive damages arising out of or otherwise
relating to the Credit Documents, any of the transactions contemplated
herein or the actual or proposed use of the proceeds of the Loans.
(c) Without prejudice to the survival of any other agreement of the
Borrower and the Crescent Guarantors hereunder, the agreements and
obligations of the Borrower and the Crescent Guarantors contained in this
Section 11.5 shall survive the repayment of the Loans, LOC Obligations and
other obligations under the Credit Documents and the termination of the
Commitments hereunder.
11.6 Amendments, Waivers and Consents.
--------------------------------
Neither this Credit Agreement nor any other Credit Document nor any of the
terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is in
writing entered into by, or approved in writing by, the Required Lenders and the
Borrower, provided, however, that:
-------- -------
(a) without the consent of each Lender affected thereby, neither this
Credit Agreement nor any other Credit Document may be amended to
(i) extend the final maturity of any Loan or of any
reimbursement obligation, or any portion thereof, arising from
drawings under Letters of Credit,
(ii) reduce the rate or extend the time of payment of interest
(other than as a result of waiving the applicability of any post-
default increase in interest rates) thereon or Fees hereunder,
(iii) reduce or waive the principal amount of any Loan or of any
reimbursement obligation, or any portion thereof, arising from
drawings under Letters of Credit,
(iv) increase the Commitment of a Lender over the amount thereof
in effect (it being understood and agreed that a waiver of any Default
or Event of Default or mandatory reduction in the Commitments shall
not constitute a change in the terms of any Commitment of any Lender),
101
(v) except as the result of or in connection with an Asset
Disposition permitted by Section 8.5 or otherwise expressly permitted
under the Collateral Documents, release any Collateral having a book
value exceeding $1,500,000,
(vi) except as the result of or in connection with a
dissolution, merger or disposition of a member of the Consolidated
Group permitted under Section 8.4, release the Borrower, ▇▇▇▇▇▇▇▇'▇ or
any other Credit Party from its obligations under the Credit
Documents,
(vii) amend, modify or waive any provision of this Section 11.6
or Section 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14, 3.15,
9.1(a), 11.2, 11.3, 11.5 or 11.9,
(viii) reduce any percentage specified in, or otherwise modify,
the definition of Required Lenders, or
(ix) consent to the assignment or transfer by the Borrower,
▇▇▇▇▇▇▇▇'▇ or any other Credit Party of any of its rights and
obligations under (or in respect of) the Credit Documents except as
permitted thereby;
(b) without the consent of the Administrative Agent, no provision of
Section 10 may be amended; and
(c) without the consent of the Issuing Lender, no provision of
Sections 2.2(a)(ii) or 2.6 may be amended; and
(d) the advance rate percentages against Eligible Receivables and
Eligible Inventory comprising the Borrowing Base may be adjusted downward
by the Administrative Agent in its good faith discretion (and thereafter
readjusted upward by the Administrative Agent in its good faith discretion
to rates not in excess of the original advance rates) without the prior
consent of, or notice to, the Credit Parties or the other Lenders;
Notwithstanding the fact that the consent of all the Lenders is required in
certain circumstances as set forth above, (x) each Lender is entitled to vote as
such Lender sees fit on any bankruptcy reorganization plan that affects the
Loans, and each Lender acknowledges that the provisions of Section 1126(c) of
the Bankruptcy Code supersedes the unanimous consent provisions set forth herein
and (y) the Required Lenders may consent to allow a Credit Party to use cash
collateral in the context of a bankruptcy or insolvency proceeding.
11.7 Counterparts.
------------
This Credit Agreement may be executed in any number of counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall constitute one and the same instrument. It shall not be necessary in
making proof of this Credit Agreement to
102
produce or account for more than one such counterpart for each of the parties
hereto. Delivery by facsimile by any of the parties hereto of an executed
counterpart of this Credit Agreement shall be as effective as an original
executed counterpart hereof and shall be deemed a representation that an
original executed counterpart hereof will be delivered.
11.8 Headings.
--------
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
11.9 Survival.
--------
All indemnities set forth herein, including, without limitation, in Section
2.6(h), 3.11, 3.12, 10.5 or 11.5, shall survive the execution and delivery of
this Credit Agreement, the making of the Loans, the issuance of the Letters of
Credit, the repayment of the Loans, LOC Obligations and other obligations under
the Credit Documents and the termination of the Commitments hereunder, and all
representations and warranties made by the Borrower and the Crescent Guarantors
herein shall survive delivery of the Notes and the making of the Loans
hereunder.
11.10 Governing Law; Submission to Jurisdiction; Venue.
------------------------------------------------
(a) THIS CREDIT AGREEMENT AND, UNLESS OTHERWISE EXPRESSLY PROVIDED
THEREIN, THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA.
Any legal action or proceeding with respect to this Credit Agreement or any
other Credit Document may be brought in the State or Federal courts located
in Charlotte, North Carolina, and, by execution and delivery of this Credit
Agreement, each of the parties hereto hereby irrevocably accepts for itself
and in respect of its property, generally and unconditionally, the
nonexclusive jurisdiction of such courts. Each of the parties hereto
further irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to it at
the address set out for notices pursuant to Section 11.1, such service to
become effective three (3) days after such mailing. Nothing herein shall
affect the right of any party hereto to serve process in any other manner
permitted by law or to commence legal proceedings or to otherwise proceed
against any party hereto in any other jurisdiction.
(b) Each of the parties hereto hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any
of the aforesaid actions or proceedings arising out of or in connection
with this Credit Agreement or any other Credit Document brought in the
courts referred to in subsection (a) above and hereby further irrevocably
waives and agrees not to plead or claim in any such
103
court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.
(c) TO THE EXTENT PERMITTED BY LAW, EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS CREDIT AGREEMENT, ANY OF
THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY.
11.11 Severability.
------------
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
11.12 Entirety.
--------
This Credit Agreement together with the other Credit Documents represent
the entire agreement of the parties hereto and thereto, and supersede all prior
agreements and understandings, oral or written, if any, including any commitment
letters or correspondence relating to the Credit Documents or the transactions
contemplated herein and therein.
11.13 Binding Effect; Termination.
---------------------------
(a) This Credit Agreement shall become effective at such time on or
after the Closing Date when it shall have been executed by the Borrower,
the Crescent Guarantors and the Administrative Agent, and the
Administrative Agent shall have received copies hereof (telefaxed or
otherwise) which, when taken together, bear the signatures of each Lender,
and thereafter this Credit Agreement shall be binding upon and inure to the
benefit of the Borrower and the Crescent Guarantors, the Administrative
Agent and each Lender and their respective successors and assigns.
(b) The term of this Credit Agreement shall be until no Loans, LOC
Obligations or any other amounts payable hereunder or under any of the
other Credit Documents shall remain outstanding, no Letters of Credit shall
be outstanding, all of the Loans and obligations owing hereunder and under
the other Credit Documents have been irrevocably satisfied in full and all
of the Commitments hereunder shall have expired or been terminated.
11.14 Confidentiality.
---------------
The Administrative Agent and each Lender (each, a "Lending Party") agrees
-------------
to keep confidential any information furnished or made available to it by the
Credit Parties pursuant to this Credit Agreement that is marked confidential;
provided that nothing
--------
104
herein shall prevent any Lending Party from disclosing such information (a) to
any other Lending Party or any Affiliate of any Lending Party, or any officer,
director, employee, agent, or advisor of any Lending Party or Affiliate of any
Lending Party, (b) to any other Person if reasonably incidental to the
administration of the credit facility provided herein, (c) as required by any
law, rule, or regulation, (d) upon the order of any court or administrative
agency, (e) upon the request or demand of any regulatory agency or authority,
(f) that is or becomes available to the public or that is or becomes available
to any Lending Party other than as a result of a disclosure by any Lending Party
prohibited by this Credit Agreement, (g) in connection with any litigation to
which such Lending Party or any of its Affiliates may be a party, (h) to the
extent necessary in connection with the exercise of any remedy under this Credit
Agreement or any other Credit Document, (i) to the National Association of
Insurance Commissioners or any similar organization or any nationally recognized
rating agency that requires access to information about a Lender's investment
portfolio in connection with ratings issued with respect to such Lender, (j) to
any direct or indirect contractual counterparty in swap agreements or such
contractual counterparty's professional advisor (so long as such contractual
counterparty or professional advisor to such contractual counterparty (i) has
been approved in writing by the Borrower and (ii) agrees in a writing
enforceable by the Borrower to be bound by the provisions of this Section 11.14)
and (k) subject to provisions substantially similar to those contained in this
Section 11.14, to any actual or proposed participant or assignee.
11.15 Source of Funds.
---------------
Each of the Lenders hereby represents and warrants to the Borrower that at
least one of the following statements is and will, throughout the term of this
Credit Agreement, remain an accurate representation as to each source of funds
to be used by such Lender in connection with the financing hereunder:
(a) (i) no part of such funds constitutes assets allocated to any
separate account maintained by such Lender in which any employee benefit
plan (or its related trust) has any interest, or (ii) to the extent that
any part of such funds constitutes assets allocated to any separate account
maintained by such Lender, such Lender has disclosed to the Borrower the
name of each employee benefit plan whose assets in such account exceed the
limits imposed by Prohibited Transaction Class Exemption 90-1 as of the
date of such purchase (and, for purposes of this clause (ii), all employee
benefit plans maintained by the same employer or employee organization are
deemed to be a single plan and each party-in-interest with respect to such
plan);
(b) to the extent that any part of such funds constitutes assets of an
insurance company's general account, the assets of the general account do
not constitute plan assets because the general account complies with
Section 401(b)(2) or Section 401(c)(1)(A) of ERISA (and the regulations,
including proposed regulations, thereunder), or the insurance company
complies with Prohibited Transaction Class Exemption 95-60 as to such
general account; and
105
(c) to the extent that any part of such funds constitute assets of one
or more specific benefit plans such Lender has identified in writing to the
Borrower the name of each such benefit plan and each party-in-interest with
respect to such plan.
As used in this Section 11.15, the terms "employee benefit plan", "party-in-
interest" and "separate account" shall have the respective meanings assigned to
such terms in Section 3 of ERISA.
11.16 Conflict.
--------
To the extent that there is a conflict or inconsistency between any
provision hereof, on the one hand, and any provision of any Credit Document, on
the other hand, this Credit Agreement shall control.
[Signature Page to Follow]
106
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Credit Agreement to be duly executed and delivered as of the date first
above written.
BORROWER: CRESCENT JEWELERS,
--------
a California corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------
Title: Chief Financial Officer
GUARANTORS: CRESCENT JEWELERS, INC.,
----------
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------
Title: Senior Vice President and
-------------------------
Chief Financial Officer,
[Signature Pages Continue]
107
LENDERS: BANK OF AMERICA, N.A.,
-------
individually in its capacity as a
Lender and in its capacity as Administrative Agent
By:
----------------------------------------------
Name:
Title:
GENERAL ELECTRIC CAPITAL CORPORATION,
individually in its capacity as a
Lender and in its capacity as Documentation Agent
By:
----------------------------------------------
Name:
Title:
108